.1995-2003 Chinese Commercial Banks Efficiency Evaluation

The fundamental point of finance reform is to change the operation efficiency ofthe commercial banks, because the operation efficiency of commercial banks affectdirectly the increase pace and efficiency of the Chinese economy. So we should know:First, when we compare the joint equity commercial banks with the stated-ownedcommercial banks, which is more efficiency? Second, what facts have influenced theefficiency of the Chinese banking? Third, how to improve the efficiency of thecommercial banks?The research on the banking efficiency is very popular in the foreign countries.There are two methods on the research of banking efficiency. One is to estimate the Xefficiency of the banking using the efficiency frontier method, the other is to appraisethe banking efficiency from the economy of scale and scope. Compared with theeconomy of scale and scope, the research on the X efficiency is less, because theresearch on the X efficiency began from the mid of 1990s and the theories needdeeply develop. Through measuring the X efficiency of the banking, we can exactlyestimate the efficiency of banking and range the banks according to the values of theefficiency. However, we can't find the reasons that affect the banking efficiency.Because of this, this paper mainly researches the economy of scale and scope ofChinese banking. However, the research between X efficiency and economy of scaleand scope is complementary with each other. The research on X efficiency mustincrease in the future.The economy of scale is the research about the relation between the scale andbenefit of one economy organization. The economy of scope is the research about therelation between the scope and benefit of one economy organization. In this paper, Iuse the translog cost function and the econometrics to research the economy of scaleand scope. The result indicates that compared to the joint equity commercial banks,the stated-owned commercial banks exist the diseconomy of scale and scope.As for the research of banking efficiency, we don't only know the efficiency state.What's more, we should find the reasons that result the banking inefficiency. Iintroduce some variables such as the technological progress, non-performing loans,asset scale and trade concentration degree and research whether these variables affectthe banking efficiency. The results suggest that theses variables play an important rolein affecting the efficiency of Chinese banking. In the end of this paper, I put forwardsome correlative policies and suggestions.In this paper, I mainly use the demonstration research and use three researchmethods. First, I combine the quantitative analysis with qualitative analysis. I use theeconometrics to measure the coefficients of the economy of scale and scope. On thebasis of the research of quantitative analysis, I do the research of qualitative analysis.This means the qualitative analysis bases on the quantitative analysis. Second, Icombine the demonstration analysis and criterion analysis. This method bases on thequantitative analysis and qualitative analysis. Third, I use the contrast analysis method.This method is very important in this paper. In measuring the economy of scale and ofbanking, I first look all the banks as a whole and research the whole's efficiency. ThenI divide all the banks into the joint equity commercial banks and stated-ownedcommercial banks and separately measure their efficiency.The paper has some characteristics. First, I integrate the research of economy ofscale and economy of scope. If we want to have a general appraise of Chinesebanking efficiency. We must research the economy of scale and scope at the sametime. Based on this, I research the economy of scale and scope in order to have ageneral research of the efficiency of Chinese banking.Second, I combine the quantitative analysis with qualitative analysis.Third, I first introduce the technological progress. Technological progress can takeeffect on the banking efficiency. However, no one in our country has research thetechnological progress. In this paper, I introduce the technological progress for thefirst time to research its effect to economy of scale.Fourth, I divide the total banks into three parts according to the scale for the firsttime to research the relation between the economy of scale and asset scale. The resultindicates that the economy of scale and asset scale have negative correlativity.