Efficiency Evaluation And Influencing Factors Research Of China’s City Commercial Banks

Our city commercial banks have developed and reformed for several years underthe regulation of the regulatory agencies and support of the local government. Nowthey have gradually embarked on the path of rapid development,But because of thecomplex economic environment and fierce competition, our city commercial bankswill face more challenges. Basel Concordat Ⅲ have proposed stricter regulatoryrequirements. On the other hand, with interest rate liberalization, the RMBinternationalization, rapid influx of private capital and foreign capital, the bankingcredit market space is getting smaller. In addition, the rapid development of Internetfinance in China makes traditional banking business face more severe challenges. Soour city commercial banks have to make more attention to management and efficiency.It has important reference value for the bank’s management and development throughassessing its performance and analyzing the influencing factors.Firstly, this article introduces the domestic and foreign literature review about thebank’s efficiency and its influencing factors. Secondly, it compares differentcalculation methods to figure out the efficiency, including the traditional methods andfrontier methods, and emphasis on the DEA analyzing method and Malmquistproductivity index. Then it describes the current situation and problems of our citycommercial banks. In the empirical analyzing part, we choose the input-oriented DEA Model to analyze the efficiency of our43banks from different angles, and evaluate itschange via Malmquist productivity index. Finally, we find that the overall technicalefficiency of our firm is not high, and the difference between the various citycommercial banks is complicated.Then this paper take technical efficiency as the dependent variable and select avariety of individual factors to conduct Tobit regression analysis. The result showsthat bank size, foreign Investment, capital adequacy ratio, return on total assets andinnovation capability positive correlated with technical efficiency, While the NPLratio has the negative correlation. Since the city banks constantly eliminate bad loansin recent years, the impact is not significant.Finally, according to the previous conclusions, and combining with the economicsituation, market change and city bank itself we propose corresponding suggestions.China’s city commercial banks should maintain a moderate expansion, have a clearmarket position, reasonable foreign investment, strengthen risk control, find morefinancing channels,and improve their management level and innovate ability toupgrade the operational efficiency and overall competitiveness. Then they canefficiently provide financial services for China’s small and medium enterprises andbetter support local economic development.