Effects Ownership Structure Of Commercial Bank Efficiency

In2001, after China’s joining the world trade Organization, China’s financial market had been gradual opening. Since China’s financial business has been completely opened to the foreign banks from December2006, foreign banks and banks have been in a fully competition, which gives Chinese-funded banks unprecedented pressure. For a long period, the efficiency of China’s commercial banks has been very low. From the view of property rights, the improper structure of property rights is the source of low efficiency. In this paper, we will focus on the effect imposed by the property rights on commercial banks efficiency.Based on existing theory and combined with the Change of Ownership Structure of Commercial Banks in China and status of the statistical analysis of bank ownership structure, we raised six theoretical assumptions to test. Then, by the use of DEA method, this paper estimates cost efficiency of12China’s representative commercial banks during2006-2011, and then decompose cost efficiency into technology efficiency and allocation efficiency. Technology efficiency also can be decomposed into pure technology efficiency and scale efficiency. In this way, this paper gets a comprehensive knowledge of the sample banks efficiency situation during2006-2011. Furthermore, this paper carry out a comparative analysis on the sample banks efficiency based on different property right structure:by one way, this paper divide the sample banks into three categories in accordance with the identity of the controlling shareholder, and by the comparison of their efficiency differences on that basis, it can be seen that the efficiency of non-state-owned banks is higher than that of state-owned banks; by another way, this paper compare the banks efficiency before and after the foreign capital joins into the sample banks, which show us that the difference is obvious. Through the above analysis, it can be primarily supposed that different structure of property rights have an effect on banks efficiency. Further, we regress the predicted efficiencies upon the banks’ ownership types that are divided according to the type of shareholders and ownership concentration. The result shows:the state-owned shares have not negative effect on the bank’s efficiency. The institutional shares, especially state-owned corporate ones increase the bank’s efficiency obviously, the foreign ones have positive effect on technological efficiency, and the domestic common ones have not obvious effect on the bank efficiency. In addition, the top five shareholders have a significant negative effect on bank efficiency, and the effect of1st shareholder to the bank efficiency is an inverted U-shape.