City Commercial Banks To Enhance The Efficiency Of Cross-regional Business Research

China’s City commercial bank, which is established on the basis of city creditcooperatives, is an important component of banking industry. With the rapiddevelopment of city commercial banks, as well as the regulatory bodies release itsrestrictions on Inter-regional operations, most of the city commercial banks haveembarked on the road of regional expansion. However, the city commercial banksexposed a lot of problems during the Inter-regional operations, such as difficulties inregional coordination, lack of talents and resources for regional expansion and so on.Therefore, the thesis is mainly on whether the city commercial banks have improvedits efficiency after they operated in different areas, as well as what factors affect theefficiency of the city commercial banks.First of all, the paper, using Data Envelope Analysis DEA, measures andcalculates the efficiency of13city commercial banks which have established branchesin different provinces, the three years before and after the operation. The results showthat either from the technical efficiency, pure technical efficiency or from scaleefficiency, the13sample banks overall began to operate in different areas when theirefficiency was rising. In the first year, they improved their efficiency and witnessed adecline in the second year. What’s more, the longer they operate in different provinces,the more obvious the trend of decline in the efficiency is.Secondly, the efficiency of city commercial banks in different areas changesvariously before and after Inter-regional operation. Therefore, this thesis divides thesample banks into three groups: eastern, central and western banks according to theirheadquarters’ locations and inspects their efficiency changes in inter-regionaloperation. The result shows that, city commercial banks in the eastern parts overalldecline in the efficiency, and the central and western parts is are on the rise. So, theauthor takes advantage of the Tobit model to conduct regression analysis anddiscusses the factors that the efficiency promotion in their Inter-regional operations.It’s found that the efficiency of city commercial banks, is negatively correlated withthe balance of non-performing loans, and the cost-to-income ratio, but positivelycorrelated with management costs and gross profit.Finally, based on the analysis above, and learning from the experience of U.S.interstate business, the thesis makes a number of feasible recommendations onhow to improve China’s city commercial banks operating efficiency in cross-regionaloperations. For example, city commercial banks should control the balance ofnon-performing loans and cost-to-income ratio, and improve the management leveletc., to enhance their efficiency. Besides, they can also take advantage of the mergersand acquisitions to promote the efficiency. City commercial banks must notimplement blind expansion when they do the Inter-regional operations, or efficiencywill be reduced by low level of management.