The Effect Of The Depositors Discipline On The Cost Efficiency Of Banks

With the continuous advancement of China's financial market reform process,market discipline has played an increasingly important role in financial regulation as a supplement to the supervision of the supervision department.Based on the view that market discipline can improve bank efficiency and the development of Chinese banking has its own particularity.This paper empirically investigates the effect of the depositor discipline on the cost efficiency of banks with a unique angle of the depositor discipline.It has certain theoretical and practical significance to the development of commercial Banks in China.Firstly,the paper sorts out the relevant literatures and then clarifies the influence mechanism of the depositor discipline on the cost efficiency of banks.Then,because of the cost efficiency cannot be directly obtained.This paper selects the input and output index based on the intermediate approach and CAMEL rating system,and the DEA model based on"bad" output-Non-performing Loans Ratio is constructed to measure the cost efficiency of banks that considers risk-taking.Finally,in order to empirically test the effect of the depositor discipline on the cost efficiency of commercial banks in China.The cost efficiency measured by DEA model is interpreted as explained variable.The price discipline and quantity discipline are selected as explanatory variables.The government's implicit insurance,information disclosure and bank size are selected as three control variables.Based on the data of 59 sample banks from 2008 to 2016,this paper empirically tests the effect of the depositor discipline on the cost efficiency of banks in China.The research results of this paper show that the price discipline of deposit and the quantity discipline of personal time deposits can motivate sample banks to improve their cost efficiency.Different with the quantity discipline of personal time deposits,the corporate time deposits do not exert effective market discipline effect.The government implicit deposit insurance system harms the depositor discipline.The information disclosure can help to improve the cost efficiency of sample banks.The cost efficiency of sample banks have a significant economies of scale.Based on the empirical results,this paper proposes countermeasures to improve the cost efficiency of banks.Strengthen the publicity of the risk awareness and financial knowledge of depositors,and train qualified market participants.Accelerate business innovation,and give savers more options.Improve the identification and publicity of the bank deposit insurance system and establish a sound and explicit deposit insurance system.Improve the information disclosure system and make the information fully disclosed.Promote the marketization of interest rates and improve financial markets system.