The Empirical Research On Cost Efficiency And Its Influence Factors Of City Commercial Banks In Western Region Of China

The rapid development of Chinese economy provided the basic guarantee for the construction and reform of Chinese financial market mechanism.The development of the financial industry has therefore become more standardized and systematic.As the major component of the financial system,the banking industry has made considerable progress in various aspects in recent years.With the development of each city economic growth and its expansion,more and more cities have established city commercial banks to meet the needs of local economic and financial development.Most of city commercial banks are established through restructuring or merger and acquisition of the local rural and urban credit cooperatives.After more than 20 years of development,city commercial banks have made considerable contribution on the local economic and financial development.In the current pattern of diversified market competition,city commercial banks are also facing many potential risks and challenges.There is a certain gap between the state-owned banks,large-scale commercial banks and city commercial banks in terms of strategic layout and operation mechanisms due to late establishment of city commercial banks.Also,the western cities' commercial banks are subject to the slow growth of local economic growth,the development of city commercial banks in such region are fall behind other banks in developed cities in many perspectives.The study on the cost efficiency of city commercial banks in the western region is not only conducive to promoting the healthy and balanced development of the regional banking industry,but also more conducive to the optimization and reform of the financial market system in the western region,so as to promote the sustainable economic development in western region of China.The majority of literatures select the city commercial banks in economically developed areas as the sample banks to do research.Few urban commercial banks in the western region are used as sample banks for research.In a small number of documents based on the sample of city commercial banks in western region,they mainly discuss their development strategies,market competitiveness and property rights structure.This paper first reviews the relevant literature on bank efficiency research domestic and abroad,and briefly introduces the connotation and classification of the efficiency of commercial banks.Next,this paper selects 18 western city commercial banks as sample,collects relevant data from 2010 to 2016 from its annual reports,audit reports,and official websites,then uses the stochastic frontier analysis(SFA)to measure the specific cost efficiency values of the sample banks.On this basis,this paper studies the influencing factors of the cost efficiency of the city commercial banks in the western region from qualitative and quantitative perspectives.Qualitatively,this paper analyzes macro,micro and industry factors.Quantitatively,this paper selects relevant variable factors to build a multi-panel data regression model for in-depth analysis.Finally,based on the above analysis and research results,this paper proposes suggestions for improving the cost efficiency of city commercial banks in the western region.According to the cost efficiency values of each sample bank obtained from the calculations in this paper,we can see that the overall cost efficiency of the city commercial banks in the western region is comparatively lower.However,the cost efficiency values of such large-scale commercial banks,Baoshang banks and Chengdu banks are basically the same as those of other large commercial banks.However,the cost efficiency of other urban commercial banks is also low,which is far from the efficiency level of the upstream banks.With the improvement of the economic environment,the development of city commercial banks has also made great progress in all aspects.During the evaluation period selected in this paper,the overall cost efficiency level has been on the rise tendency.In the quantitative study of its influence factors,the factors such as asset quality,bank size,and risk management of the city commercial bank have a significant effect on their cost efficiency,but the impact of the development of the middle business level of the city commercial bank on its cost efficiency is not significant.Based on the results of the related analysis,this paper proposes relevant suggestions for improving the cost efficiency of city commercial banks in the western region from the aspects of market strategic positioning,business innovation,and financial technology.This will further promote the healthy and sustainable development of the banking industry in the western region,and at the same time provide reference for the development of city commercial banks in other regions.