The Relationship Of Efficiency, Capital And Risk Of Our Country’s Banks

First of all, we study the development of China’s commercial bank inthis paper. From the analysis of the operation of China’s commercial bank, theliquidity of banking system is enough, the assets, liabilities, credit supply increases, the interbank market volume continue to rise; From the banking efficiency analysis, industry competitive, further enhance profitability; From the banking capital analysis, capital adequacy ratio to be continued ascension, industry continuously strengthen supervision; From the banking risk, non-performing loans decline, and at the same time, the potential credit risk has increased.Then use stochastic frontier analysis method to calculate the cost efficiency, revenue efficiency and profit efficiency as the bank efficiency measure variables; theratio of actual loss loans to owners’ equity and the ratio of non-performing loans to total loan ratio measure the risk of the bank; with ratio ofequity to total assets ratio and the ratio of equity of interest-bearing debt ratio measure of bank capital variable. From the ratio of2003to2010, the measuring of bank efficiency, such asCoseff, Reveff and Proeff,were rising, indicating our country banking efficiency was improved; the measuring of bank risk, such as LOS/E and NPL/L was in downward trend, which meaning the bank risk was reduced; the measurement of bank capital, such as E/TA and E/FUN was in the rising stage, showed the bank capital adequacy ratio in the unceasing increase. At the same time, adding the macro-economic variables to the bank efficiency variable,we investigate the inter-temporal relationship between bank efficiency, capital and risk, and go into the study employing several definitions of the objects. Drawing on a sample of iconic commercial banks from2003to2010, we use the Granger-causality methodology in a panel data framework. Our research results show that the risk of commercial Banks in China is negative granger causality for its efficiency, means that high-risk Banks’non-performing loan ratio is higher, the damage efficiency of the bank level. And a lower risk of bank loan loss less, the corresponding bank efficiency is also high. At the same time, some macro-economic variables on bank risk exists quite strong granger causality. Banking scale on bank risk show negative granger causality, means with the scale enlargement of the banking industry, the bank will also reduce the level of risk. These results through the robustness test to obtain the very good verification. These results mean that we can reduce the bank business risk to carry long efficiency of the bank.Country can use the way of macroscopic and microscopic to reduce the bank risk. From the way of macroscopic, to reduce the risk of commercial Banks in China, we must first improve the macro environment of the bank management, including domestic and international economic situation, the national macroeconomic policy and social credit environment.From the view of microscopic, strengthen the industry policy guidance and supervision, and at the same time, improve the strength of the commercial bank itself. We strengthen supervision of banking, strengthen the capital constraint, improve the capital management level.