Empirical Study On Profitability Efficiency Of Chinese Commercial Banks

As the center of the national economies, Commercial banks carry the risk of impact for society as a whole. With the financial globalization process accelerating ceaselessly and Chinese financial market opening further, China’s commercial banks are not only facing domestic competition, and also facing the pressure of competition with foreign banks. If Chinese commercial banks want to gain a firm foothold in the fierce competition, they must improve their core competitiveness; the most concrete manifestation is profitability efficiency.In this paper, we have improved the traditional profit efficiency model and proposed the profitability efficiency model, doing an empirical analysis of14commercial banks in China from2001to2010。 The profitability of efficiency is decomposed into technical efficiency, allocative efficiency and scale efficiency. Meanwhile, we have also done dynamic analysis of all commercial banks. The total factor productivity change is decomposed into technological progress and changes in technical efficiency. At last, we have analyzed the factors which influence the profitability efficiency from internal factors and external market environment. The results show that:(1) Chinese commercial banks get75.7%average in profitability efficiency; they still have24.3%development spaces. Technical efficiency, allocative efficiency and scale efficiency have7.3%,9.4%,8.8%improvement spaces separately;(2) For the past decades, the state-owned commercial banks have averaged3.7%annual growth rate in total factor productivity, the contribution of technical progress on the rate is larger, reaching3.9%, while only0.5%of the technical efficiency change. the joint-stock commercial banks have averaged1.7%annual growth rate in total factor productivity, the contribution of technical efficiency change on the rate is larger, reaching2.1%;(3) the quality of assets, non-performing loan ratio, the degree of financial innovation has a significant role in the efficiency of the profitability of the commercial banks, the banks can improve capital utilization efficiency, reduce non-performing loan ratio of financial innovation to improve the efficiency levels of profitability;(4) commercial banks can not expand its market share improved the efficiency of profitability significantly.The innovation of this paper is:for most of the literature using a linear programming model or transform to a linear programming model in bank efficiency research and analysis, the adaptability of the model does not give too much attention to these papers; nonlinear programming model based on geometric distance function can improve the adaptability of the linear programming model on a certain extent.