Study On The Industrial Organization Of Commercial Banks In Lan Zhou

In recent years, scholars do a detailed study in the field of China’s banks with industrial organization theory. The S-C-P paradigm Structure,(market structure)-Conduct (market behavior)-Performance (market performance) is the most classic method in lots of research. In the study of the relationship among market structure, market behavior and market performance, Market Power hypothesis (MP) and Efficiency Structure hypothesis (ES) are representative. Market Power hypothesis holds that market structure is the main factor affecting market performance. By affecting market behavior, it ultimately determines the market performance. Different market structures will produce different market performance. However, Efficiency Structure hypothesis believes that market structure is not the main factor that affects market performance, it is bank’s operational efficiency that can determines its performance. Efficient banks will be easier to obtain more profits and achieve a higher level of performance. In order to make the study more targeted, this article will verify between the factor of market structure and operational efficiency which is the main reason to determine the market performance in banks, Lanzhou City. For Industrial Organization based in this paper, operational efficiency is introduced to reflect the result of market behavior in the process of market behavior research. It is used to measure the consequent of market behavior by quantitative analysis. At the end of this paper, it establishes a regression model to describe the relationship of market structure, operational efficiency and market performance, hoping that it can illustrate the development status of commercial banks in Lanzhou City.As the principal roads of the Northwest Territories, the economy of Lanzhou City is relative mature, The developing level of commercial banks is also at a higher level. In this paper, the commercial bank market in Lanzhou City is the object of study, which includes large commercial banks (Industrial and Commercial Bank of China, Construction Bank, Bank of China, Agricultural Bank and Bank of Communications); small and medium-sized commercial banks(China Merchants Bank, Pudong Development Bank and CITIC Bank); local commercial banks((Lanzhou banks, rural credit cooperatives, rural cooperative banks).Firstly, there are three-part empirical analysis of market structure, market behavior effects-operational efficiency, market performance respectively. In the market structure section, it determines the type of market structure of Commercial Bank Lanzhou City and estimates the market concentration index by the calculation the market share of assets, deposits and loan. In the operational efficiency section, it set up a relatively simple input-output model. Input variables are the number of institutions established by various commercial banks in the city and daily operating expenses; output variables are interest income and customer satisfaction. With the method of data envelopment analysis (DEA), the commercial banks operating efficiency is measured as well as ranked. In the market performance section, considering the aspects of profitability, liquidity and security, and selecting three indexes of return on assets (ROA), deposit-loan ratio and loan structure ratio.Then, by the establishment of a linear regression model, it aims to reflect the relationship of market structure, operational efficiency and market performance. That is how much market structure and operational efficiency affect market performance. Finally, the conclude is as Commercial banks in Lanzhou City, market structure have little impact on its performance, the level of performance of banks is largely determined by the operational efficiency. The results prove the validity of efficiency structure hypothesis (ES) in the market of Lanzhou City.At the end of the article, eight feasibility proposals are proposed from three aspects of optimizing the market structure, enhancing the effect of market behavior and improving market performance with the summary of the results in the article above.