Abstract
This article is based on the SBM-Undesirable model to measure and decompose the technical efficiency of commercial banks from 2003 to 2014, and based on panel date to decompose its affecting factors. Our research shows: Since the banking began to reform from 2003, technical efficiency and pure technical efficiency have been significantly increased, the efficiency of scale also had obvious improved before 2008, thereafter growth is more gentle, and even state-owned banks are experiencing a downward trend. Reform impact is more consistent for different types of banks, basically promoting the improvement of the efficiency of the bank. With the advance of market interest rates, internal factors such as management, business innovation become the key to enhance the efficiency of banking sector. If the banks do not continue to reform and still blindly expand the scale of assets, they will not get higher efficiency.
Highlights
Since the 1990s, dramatic changes have taken place in the market structure and the operating situation of Chinese banking, along with the going on of the financial sector reform
Charts 1-4 show while taking into account non-performing loans and non-performing loans without considering changes in the efficiency of banking technology trends: We can see from the data that during the inspection period, the efficiency value under the consideration of undesirable output is higher than that of the condition without the consideration of undesired output, which is more obvious in joint-stock commercial banks, and city commercial banks
I think that the reason for this result is because non-performing loans are included into the output of non-performing loans, and around the year of 2002, NPL ratio of the banking sector is at the peak, when our country launched the reform of the banking sector
Summary
Since the 1990s, dramatic changes have taken place in the market structure and the operating situation of Chinese banking, along with the going on of the financial sector reform. This article will adopt two-stage analysis method on the basis of SBM model which added undesirable output, to measure the efficiency of 25 Chinese commercial banks in 2003 - 2014, and to conduct an empirical analysis on the key factors affecting the efficiency, evaluating the effectiveness of China’s banking reform in recent 15 years and giving feasible advice on the future reform direction.
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