Evaluation On Efficiency Of City Commercial Banks Based On DEA-Tobit Two-stage Model Illustrated By The Case Of Nine City Commercial Banks Of The Six Provinces Of Central China

Commercial bank is an important component of banking industry. Its operating conditions seriously affect the country’s banking industry even the entire national economic development and social stability. As a strong part of banks, city commercial bank is growing in scale and its influence is gradually enhanced. Now it has joined the third echelon of China’s banking industry after five commercial banks and twelve national shareholding commercial banks. With the increasingly fierce competition in banking industry, city commercial bank is facing the problem that how to improve the comprehensive competitiveness to realize the sustainable development. Bank operating efficiency is the most comprehensive evaluation index. There are 146 city commercial banks in our country in December 2013. Its total assets are still relatively weaker compared to the large state-owned commercial banks, which implies the city commercial banks of the six provinces of central China need to enhance their own force in urgent.For simplified methods and little regionalization research of evaluation on efficiency of city commercial banks, the paper evaluates its efficiency and affecting factors of the six provinces of central China using DEA-Tobit two-stage model. The super efficiency model of data envelopment analysis(DEA) is used in the first stage. Input indicators are the number of employees, fixed assets and deposits. Output indicators are loans, operating income and net profit. It is concluded that five banks are effective in DEA while four banks are invalid by analyzing nine city commercial bank’s comprehensive efficiency, technical efficiency and scale efficiency. Then turn to projection analysis, it is found that the three input indicators are all redundant in DEA invalid banks.In the second stage, Tobit model is applied to analyze the factors affecting efficiency. Per capital operating expenses, Loan-to-deposit ratio and capital adequacy ratio are chosen as factors. The results of the study show that per capita l operating expenses and Loan-to-deposit ratio are both negatively related to the efficiency of these banks while capital adequacy ratio is positively related to efficiency. Finally put forward the proposals to improve management efficiency according to the analysis results for the six provinces of central city commercial banks.The paper evaluates the efficiency of the six provinces of central China using DEA-Tobit two-stage model in 2012, which focuses on the effective evaluation of projection analysis. Not only can projection value guide the city commercial banks to optimize the allocation of resources, but also it can dig out of the bank’s future development potential. It means that projection value is playing an auxiliary decision-making role to put forward suggestions and measures to enhance the efficiency of bank.