The Productivity Change In Chinese Commercial Banking

With the continuous reform and deregulation of Chinese banking, Chinese commercial banking has gradually changed into the phase, in which state-owned commercial banks occupy domination, combined with the co-existed competition with joint-stock commercial banks, city commercial banks and foreign banks. With the entrance of WTO, the deadline of protection of domestic banks approaches, alongside with the integration of global economy, and domestic banks will be confronted with drastic competition with big bank groups from western developed countries. In order to provide policy basis for future reform, it is of great significance to study the competitiveness of Chinese commercial banks, correctly evaluate the performance of Chinese commercial banks, analyze the productivity and changes of domestic banks, examine the gap between domestic and overseas banks, and explores the reasons.On the account of the review of relevant researches on foreign and domestic banking, the most generally common approaches, nonparametric Malmquist index approach and parametric stochastic frontier approach, are employed in this paper to estimate the productivity change of each bank in 1996-2003 in Chinese commercial banking and also estimate the total factors for productivity change, drawing the conclusion that productivity change of domestic banks are inclined to increase with the entrance of WTO, and the increase room for domestic commercial banks is wider than that of joint-stock commercial banks. In respect of productivity increase factor, the increase lies in the efficiency improvement and technical progress. In short term, the improvement of efficiency make great effect on the productivity increase but the improvement room is limited, while in long term, technical progress is the eternal motive power for productivity increase of banks.Based on the above results, some suggestions are made in this paper. The competitive level in banking market, intermediate business for local commercial banks, the technical level, and the quality of the labor should be improved. The financial supervision should enforced to keep the banking system stable.