The Analysis On China Commercial Banks' TFP And Its Influence Factors

Finance industry of China opened up at the end of 2006.China's commercial banks will face the competition of the foreign banks, which own considerable funds, advanced technology and experience in business management. It is important to find out how to improve the commercial banks'competitive power and guarantee the stability of China's economy. Firstly, the thesis analyzes the development of China's commercial banks. We find that the corporate banks, which have lower proportion of non-performing loans and flexible service systems, break the state owned banks'monopoly. Meanwhile, compared with the foreign banks, China's commercial banks have less competitive power on management, technology and human capital. Secondly, based on Cobb-Douglas production function, the thesis calculates the total factors productivity of fourteen banks in China from 1996 to 2004.Then it analyzes the trend of TFP and the difference between the state owned banks and the corporate banks. The total factors productivity of China's commercial banks has been increasing in the recent years, while the state owned banks'TFP increases more quickly. Thirdly, we make a correlation analysis of TFP, ownership, human capital, scale and financial innovation and try to find out how to intensify market competitive power of China's commercial banks effectively. According to the model, we could get a conclusion that human capital and ownership have important and significant effect on TFP. Especially the quality of human capital has positive and significant effect on TFP. The quality of the state owned banks'human capital, which grows faster than the corporate banks, make the state owned banks'TFP grow much faster. Finally, we pose some effective means on improving the competitive power of the commercial banks in China. The commercial banks should increase the quality of human capital, optimize the ownership structure, control the banks'appropriate scale and increase their financial innovation. Therefore, they could increase the level of their productivity and take their places in the competition with the foreign banks.