Analysis On The Competitiveness Of China’s City Commercial Banks

Commercial Banks are such important parts of the economic system that have a pivotal position, especially in the financing structure in China, in which indirect financing is a main stay.At present, as the reform of China’s financial sector system continued to deepen, a diverse banking service system has established in which state-owned commercial banks, joint-stock commercial banks, urban commercial banks and rural commercial banks are included.However, with the four state-owned commercial banks came to the market after stock reform successively and global economic integration, China’s banking industry is increasingly competitive, especially after China’s accession to the WTO and the full liberalization of the foreign banking business.Urban commercial banks are joint-stock commercial banks funded jointly by the local businesses, residents and local governments on the basis of urban credit cooperatives and the approval of the State Council. They are mainly providing financial support for SMEs and paving the way for development of local economy.By the end of2010, the number of urban commercial banks in China has reached147and has become the "third tier" of China’s banking industry.The development of urban commercial banks, has enriched China’s financial system institutions, raised the standers of China’s finance, improved the quality of service and diversified the financial services system.Urban commercial banks, as an important part of China’s banking industry, play a significant role in the development of China’s financial sector and China’s national economy, which can not be ignored.However, as competition intensifies, the differentiation between China’s urban commercial banks is increasingly serious. Some of the well-developed urban banks have already entered a track of rapid development, and started cross-regional layout to be star banks, while some are still facing the problems like, the lack of capital, the low-quality assets, the high rate of non-performing loans and the low level of profitability, etc.. In this case, urban commercial banks, as an important force in China’s banking industry, drawing great attention in the circle, have become the hot topic in banking sector in recent years. Therefore, this paper hopes to draw on the theory of competitiveness of enterprises with the bank characteristics to analyze the competitiveness of China’s urban commercial banks.Through the establishment of the evaluation system of analyzing the competitiveness of China’s urban commercial banks, this paper has analyzed the competitiveness of urban commercial banks in China. It used the method of financial indicators and data envelopment analysis (DEA method) respectively to analyze the competitiveness of the19urban commercial banks during the year2008-2010. This paper, based on the empirical results and personal opinions, has offered advices and suggestions on how to improve the competitiveness of urban commercial banks for further development.This paper is consists of six chapters.Chapter one is the introduction. This chapter explains the background and significance of the topic of this paper, and talks about the related domestic and international literature reviews, the idea of this research, main innovation and deficiencies.The second chapter is an overview of the competitiveness of commercial banks. From the theory of general business competition, this chapter describes the competitiveness of urban commercial banks, and prepares for the evaluation of the competitiveness of China’s urban commercial banks in the following chapters.Chapter three is the overview of the development of urban commercial banks. It generally presents the developing process of urban commercial banks in China, discussing and analyzing the existing problems of urban commercial banks at presence.Chapter four is the analytic method of the competiveness of China’s commercial banks. This chapter first points out the index system of the research on the competitiveness of China’s urban commercial banks from the aspects of profitability, safety, mobility and sustainable development. In this research, the financial indicators analytical method is employed.Chapter five is the analysis of the competiveness of urban commercial banks. This chapter makes an empirical analysis about the financial data of the19urban commercial banks during the year2008-2010by employing the method of financial indicators and data envelopment analysis (DEA method) respectively. Based on the four features of profitability, safety, mobility and sustainable development, it first employed the11financial indicators to make a financial indicator analysis of the19commercial banks. And then evaluated the operating efficiency (technical efficiency, pure technical efficiency and scale efficiency) of the19urban commercial banks by applying the DEA model, which is equal to the analysis of the competiveness of the19urban commercial banks form the perspective of DEA.The sixth chapter is the suggestions on raising the competitiveness of urban commercial banks. Based on the results of analysis in chapter five, this chapter offers recommendations to improve the competitiveness of China’s urban commercial banks.This paper contributes to establish an evaluation system to analyze the competitiveness of China’s urban commercial banks on the basis of former studies conducted by experts and scholars. It draws on the newest panel data during2008-2010to analyze the competiveness of the19urban commercial banks in this period, by employing the methods of financial indicators and DEA respectively.Due to time constraints and author’s limited capacity and energy, this paper also exists lot of inadequacies. One is that the set of financial indicators should be much closer to bank realities. Due to limited financial data as well as my own capacity, the setting of indicators did not reflect reality as more comprehensive and accurate. Another is on the selection of samples. Due to the limited data and the consistence with the panel data of the year2008to2010, this paper only selected19urban commercial banks as its sample, which is such a small proportion compared with all the urban commercial banks throughout the country. Therefore, the evaluation of competiveness is not very comprehensive.Because of the limited knowledge of author, errors and inaccuracies are appeared in this paper inevitably. Suggestions and comments are welcomed. I, hereby, express my heartfelt appreciation.