Research On The Relationship Between Cost Efficiency And Stability Of Commercial Banks In China

At present,the global economy is still in the depth adjustment period,the Chinese economy still have large downward pressure,affected by the economic structural adjustment and management of excess capacity,quality of banking assets will continue to pressure.At the same time,influenced by factors such as interest rate liberalization and bond market default events,the banking industry will be more difficult to manage market risk,liquidity risk and investment risk.This puts forward higher requirements on the risk control ability of the banking industry.In addition,The rise of Internet finance has also greatly squeezed the profit margins of traditional banking.The profit growth of China's banking industry has declined significantly due to the complex forms and policies at home and abroad.On March 30,2016,ICBC(Industrial and Commercial Bank of China),BOC(Bank of China)and CCB(China Construction Bank)published the 2015 performance report on the same day,the net profit growth fell to about 1 per cent.On september 30,2016,The China banking regulatory commission(CBRC)issued "The Notice of the China Banking Regulatory Commission(CBRC)on the Overall Risk Management Guidelines for Issuing Banking Financial Institutions",banking financial institutions should establish a risk management structure,risk management strategy,risk appetite and risk limit,risk management policies and procedures,management information system and data quality control mechanism,internal control and audit system.According to the banking sector's severe reality,this paper based on modern portfolio theory,market constraint theory and principal-agent theory,the single-stage stochastic frontier analysis method was adopted to analyze the cost efficiency of China's commercial Banks;Z-Score model was adopted to evaluate the stability of commercial Banks in China;finally,using granger causality test to analyze the relationship between cost efficiency and stability of commercial Banks in China.The results showed that:1.From 2002 to 2015,the cost efficiency of China's commercial Banks is rising with fluctuation,after 2009,it began to rise steadily;2.The stability of commercial Banks in China is very different,in turn,Foreign Banks,Urban Commercial Banks,State-owned Banks and Joint-stock Banks;3.The cost efficiency of commercial banks in China is Grainger's reason for stability,but the stability is not the reason of the bank cost efficiency.