Empirical Research On Chinese Commercial Banks’ Efficiency Based On Network DEA Method

As the major component of the financial industry, commercial banks play a roleof financial intermediation. The efficiency of commercial banks is directly related tothe resource allocation and sustainable development capacity, and has a direct impacton the sustained and healthy development of our national economy. The efficiencyimprovement of commercial banks is the key to guard against risks and to promotesustainable development of banking sector, and also the focus to deepen the financialreform in China.This paper studies technical efficiency and pure technical efficiency of14maincommercial banks in China during the period2000－2010by network DEA methodunder the new perspective of intermediate variable savings, which overcomes themain dilemma whether to treat deposits as an input or an output by using of DEAmethod to measure banks’ efficiency. From the empirical results, we can see technicalefficiency of the four major state-owned commercial banks is not as well asshareholding commercial banks, but pure technical efficiency is as well asshareholding commercial banks and has a very stable performance. Technicalefficiency of state-owned commercial banks is easily influenced by state policies andthe financial crisis and also has a higher fluctuation, and our country commercial bankefficiency is exactly promoted by stock structure reform. On the basis of efficiencyranking of commercial banks and the reasons of low efficiency of state-ownedcommercial banks, I also give the reform suggestions on improving the efficiency ofChinese commercial banks.