Measuring The Efficiency Of Commercial Banks In China

Frontier efficiency methods have been widely applied in measuring efficiencies of financial institutions. Concerning the fact that the improvements in frontier efficiency study and the application of more advanced efficiency concepts have not been employed in recent domestic efficiency study, this paper builds more elaborated models and functions to study the efficiencies of 13 Chinese commercial banks by measuring their cost efficiency, standard profit efficiency and alternative profit efficiency. The finding turns out that Chinese commercial banks have very high cost efficiency while their profit efficiency is quite low. Also there exists a positive correlation between profit efficiency and scale. At last this paper finds that all the banks enjoy economies of scale by measuring RSCE .