Research On The Efficiency Of Chinese Commercial Banks

The grim-competing bank system in China has been formed since the end of 2006, Efficiency is the centralized reflection of the competition ability of commercial banks, which is the key element to deploy social resources effectively and develop economy rapidly. At first, I research the technical efficiency, pure technical efficiency and scale efficiency of Chinese state-owned and shareholding banks during 1998-2004, using Data Envelopment Analysis (DEA) approach, then compare the efficiency between the 15 banks and investigates the state of return to scale through the improved model of DEA. In the end, I introduce a DEA-based Malmquist index and its decomposed index to evaluate explicitly in the dynamic efficiency of these 15 banks, as well as the "catching-up effect" and the "frontier-shift effect". The result indicates that since 1998 the efficiency of our commercial banks has been remained at a relatively high lever which has a rising trend with small-extent fluctuation. The usage and allocation of the resources become more and more effectively. No phenomenon indicates that there is an obvious winner between Chinese state-owned banks and shareholding banks, so proprietary right structure is not the main reason which results in efficiency differences. Comparing with state-owned banks, there is a bigger difference during shareholding banks. My research on dynamic efficiency shows that the producing-validity of the 15 banks is increased year by year. The increase of efficiency of shareholding banks is higher and more volatile than that of state-owned banks. At the same time, the "catching-up effect" plays an important role in the improvement of producing-validity. In order to improve competition, each bank adjusts manage behavior and improves management, so the whole efficiency of our banks has been improved. Technical-changing-index indicates that ability to innovate of the shareholding banks is stronger than that of the state-owned banks. So the innovation of the state-owned banks needs to be improved.