Measuring the productivity of urban commercial banks in China

Abstract

This paper contributes to the productivity analysis literature by measuring the productivity of 76 urban commercial banks operating in China's 27 regions from 2013 to 2018. A spatial total factor productivity index is constructed using a spatial autoregressive production function. The index is decomposed into the efficiency change and the returns to scale change, and it identifies both spatial direct (feedback) and spatial indirect (spillovers) components. The result confirms positive spatial dependence in the production of urban commercial banks. Additionally, productivity of China's urban commercial banks increases, which is mainly contributed to by the returns to scale change.