Abstract
This chapter will mainly deal with the methods used to estimate bank efficiency and bank competition in China. With regards to the estimation of bank efficiency, the technical, pure technical and scale efficiencies of Chinese commercial banks will be evaluated using the non-parametric data envelopment analysis, whereas the stochastic frontier approach will be used to estimate the cost, revenue and profit efficiencies of Chinese commercial banks. The methods used to examine the competitive condition in the Chinese banking industry will also be explained in this chapter, and finally, the chapter will discuss the modelling framework to investigate the impact of competition on efficiency in the Chinese banking industry.
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