Empirical Research On City Commercial Banks Efficiency Of Shandong Province

With the rapid development of economy, banking industry of China has improved significantly in every respect. City commercial banks achieve great performance with rapid development in recent decades. Until the end of November of 2013, there are 145 city commercial banks in China. The total assets of them reaches 11.98 trillion, total deposits reaches 8.61 trillion and total loans reaches 5.61 trillion. In recent years, city commercial banks in Shandong Province have achieved rapid development in overall scale of operation. At the end of 2013, the total assets of them reaches 0.65 trillion, increase rate reaches 11.17%. With further opening of capital market in China, a large number of foreign banks enter into market of China, which leads to more competitiveness in banking industry. As an emerging part of financial market, city commercial banks have to improve the efficiency. Only in this way can be a winner in the fierce competition.This paper, making use of nonparametric DEA analysis method, researches efficiency value of city commercial banks in Shandong province. With qualitative analysis and quantitative analysis, this paper gets the overall technical efficiency, pure technical efficiency and scale efficiency of city commercial banks in Shandong Province with DEAR Then it does empirical research of influence factors of city commercial banks’efficiency in Shandong Province. Finally, it puts forward the recommendations of how to improve city commercial banks’efficiency.The empirical research of city commercial banks’efficiency in Shandong Province is the mainbody of this paper. In the first stage, based on actual development of city commercial banks, this paper calculates the overall technical efficiency with DEA method. Then, it selects assets, administration expense, and deposit as input variables, and selects net margin as output variable. With the result of overall technical efficiency, pure technical efficiency and scale efficiency from 2008 to 2013, this paper finds that the overall technical efficiency of city commercial banks in Shandong Province is higher than the four major state-owned commercial banks and stock-holding banks of China, but the difference is smaller at the end of 2013. With contrastive analysis between city commercial banks in Shandong Province and city commercial banks in eastern region, central region, and western region, the paper finds that city commercial banks in Shandong Province have a higher efficiency value among them form 2009 to 2013. In the second stage, it does empirical research of influence factors of city commercial banks’efficiency in Shandong Province with Stata. The empirical results shows that asset size, non-performing loan ratio, innovation, ownership structure, capital adequacy ratio are main factors of city commercial banks’efficiency in Shandong Province.