An Empirical Analysis Of Operating Efficiency And Influencing Factors Of China’s City Commercial Banks

At the end of2013, China’s city banks has more than27million employees,145legal institutions; their total assets reach15.18trillion Yuan in2013compared with their total1.462trillion Yuan,,their total assets increase by nearly9.4times in10years, China’s city banks’position in the banking industry becomes increasingly important. Nevertheless, the current domestic banking industry becomes increasingly competitive. In2013, the total profit after tax of China’s state-owned banks is838.23billion Yuan, the total profit after tax of China’s joint-stock banks is294.54billion Yuan, and the total profit after tax of China’s city banks is only164.14billion Yuan. In the development of various aspects, China’s city banks performs inferior to them, because of the late foundation date China’s city banks, weak in technology, scales, and management. So that, China’s city banks often performs not well in the competition of the banking industry. While, bank efficiency is a composite indicator that reflects the competitiveness of a bank, essentially the competition among the banks is the competition in bank efficiency.Therefore, how to improve the current operating condition and their business efficiency, competitiveness worthy of China’s city banks deserve our more discussions and researches.Based on existing theories and methods, this article choose some appropriate indicators, do empirical analysis of the operating efficiency and influencing factors of China’s city banks. Firstly, this paper uses DEA to measure the operating efficiency of28banks and make some comparative analyses of different operating efficiencies, including the comparative analysis of the same and different kind of banks, the comparative analysis of city banks in four major economic regions, the comparative analysis of city banks of listed and unlisted. The comparative analyses show that from2007to2013the efficiency of city banks is usually higher, especially the Beijing Bank has always been on the productivity frontier, Beijing Bank shows an excellent performance among them; comparing the technical efficiency city banks rank no.1, joint-stock banks rank no.2,followed by a minimum efficiency of state-owned banks; the operating efficiency of the banks in four economic regions reflects a big difference, the highest level of efficiency exists in eastern city banks. And the operating efficiency of China’s city banks is closely related to the development of the various regions and the regional economy. The efficiency of listed city commercial bank is generally higher than non-listed city banks. Secondly, this article selects many kinds of factors, including our country’s macroeconomic situation, the city commercial bank’s asset size, resource allocation, asset quality, profitability, innovation, listing, ownership structure, stability, and select an appropriate measuring indicators to do Tobit regression analysis on the operating efficiency of city banks, aimed at discovering the dominant factors that effect the city banks’operating efficiency in order to take effective methods to improve it. The Tobit regression model’s result shows that China’s GDP growth rate, the city banks’ loan ratio, the logarithmic of total assets, ROA, the listed attributes have significant positive correlations with the operational efficiency of city banks. And the non-performing loan ratio, the state-owned properties of city banks’largest shareholder, and the proportion of NII has significant negative correlations with the operational efficiency of city banks. Finally, this article gives some suggestions to improve the operating efficiency of city banks, including expand the city banks’ modest scale through reasonable cross-regional business development and mergers and acquisitions; improve its allocation capacity and its structure; improve the technical level of loans and the risk control capability of city bank, do well in each process, including before loans, during loans, after loans,do the best to reduce city bank’s non-performing loans, control the city bank’s risk effectively and actively seek opportunities for financing and listing, introduce more new strategic partners, try other methods to improve the existing structure.