The Research On Relationship Between Scope Economies And Operating Efficiency Of Commercial Banks

Although under regulations, inner demand and practice for banks’hybrid operation still exist. In a very long time, it’s a inevitable trend to hybrid operation for banks’fast development. The research on banks scope economies refers to the problem of hybrid operation essentially. Scope economies of commercial banks mainly examine the decrease of cost or the increase of revenue as a result of offering more sorts of products and services. Therefore, it makes big sense that doing research on banks scope economies under the tread of hybrid operation.This thesis examines the dynamic relationship between scope economies and banks operation efficiency by estimating scope economies firstly, then try to make the decider know why commercial banks turn to hybrid operation persistently. Therefore, this thesis firstly start with general theory of scope economies, extending to the theory of scope economies of commercial banks. Secondly, with the generalized translog cost function and eviews6.0, this thesis calculates the global scope economies and scope economies of specific products (deposit, loan, intermediary business). Thirdly, tests the operating efficiency, pure technical efficiency, scale efficiency of20sample banks for2005-2010, using two-stage dynamic data envelopment analysis model (DEA model). On this basis above, we have established a tobit regressive model to analyze the relationship empirically between scope economies and banks’operating efficiency.It demonstrates that:the sample banks have weak global economies of scope, but there are not obvious differences in all types of banks. They all have scope economies of the deposits and loans, and the most state-owned banks, followed by joint-stock banks and city commercial banks and rural commercial bank is the weakest. They all have no scope economies of intermediary business. There is a remarkable impact to pure technical efficiency and scale efficiency.Finally,we have made some suggestions to improve Chinese scope economies and even operating efficiency, considering the problems existing in the real operating process of commercial banks.