Empirical Analysis Of Risks And Returns On The Efficiency Of Chinese Commercial Banks

In this paper, the dynamic panel methods are used to study the risk and returncharacteristics that affect the efficiency of China’s commercial banks deeply.Firstly，this article briefly introduces related concepts such as cost efficiency,profit efficiency as well as dynamic panel.Then taking DEA method to measure thecost efficiency and profit efficiency of the42commercial banks during2004-2010.The results show that: the cost-efficient commercial bank profit efficiencyis also higher. If the total assets are too high or too low, the efficiency of commercialbanks is not ideal, the paper shows that the asset size of bank has a nonlinearrelationship with efficiency, and further can be launched down the hypothesis of the"U" shaped. Shareholding banks efficiency is more efficient than other types of bank.Secondly, the paper uses dynamic panel to analysis the relationship betweencommercial banks risk-return characteristics and the cost and profit efficiency. Theresults show that: the risk-return characteristics affect the cost efficiency and profitefficiency differently, most of the risk-return characteristics have no influences on thebank efficiency, which we can see that the relationship between the risk-returncharacteristics and bank efficiency is complex, it is not effective to control a risk orincrease return to improve efficiency, various factors need to be integrated. Bankefficiency is coherent. Obviously, listed commercial banks’ cost efficiency and profitefficiency are higher.Finally, based on the results of empirical research, this article suggestsreasonable assurance as to the scale of commercial bank assets, to manage the risks and returns together, reform commercial banks to appear on the market, and improveits internal control, social constraints.