Empirical Analysis On Commecrial Banks’ Efifciency And Influence Factors In China

Firstly, this paper defines the meaning of the cost efficiency, the standard profitefficiency and alternative profit efficiency of commercial banks, and combs thecorrelative theories and measurement methods of the efficiency. Next, combined withsome researches home and abroad and the practice of Chinese commercial banks, thispaper selects cost efficiency, standard profit efficiency and alternative profit efficiencyas the main objects of the efficiency. The paper measures China’s33commercialbanks’ efficiency during1994-2009using DEA methods. The conclusions show that:profit efficiency levels of the banks analyzed are well below those of cost efficiency;joint-stock commercial banks on average are more cost and standard profit efficientthan state-owned commercial banks. Taking all banks together, while standard profitefficiency and alternative profit efficiency has remarkably increased, cost efficiencyhave almost unimproved over the period analyzed.Secondly, this paper investigates sources of bank efficiency based on panel datamodel. The results confirm our estimation of lower efficiency levels of state banksthan that of the joint-stock banks, and that medium-sized banks are the most efficient.Underperforming banks tend to be more risky, to incur higher operating costs and havemore subsidies. More profitable banks with a focus on fee-based activities tend to bemore efficient.Finally, according to the study, the countermeasures of improving commercialbanks’ efficiency include: increasing the ownership system reform, strengtheningmanagement of loan funds, streamlining the scale.