Abstract
Based on Super-SBM DEA model, this paper investigates the efficiency of 12 Chinese commercial banks from 2005 to 2013 under the consideration of undesirable output, and verifies the truth that considering undesirable outputs (non-performing loans) can make research result more authentic by comparing with the consequence obtained without considering undesirable output. On this basis, this paper takes a further advantage of Malmquist index to analyze Chinese commercial bank efficiency. The results show that the efficiency of Chinese commercial Banks mainly depends on technological progress. Therefore, that technological progress is the factor influencing the efficiency of Chinese commercial Banks should not be ignored. Finally, this paper puts forward some relevant proposals for Chinese banking sector to improve operational efficiency and promote the technological progress.
Highlights
Since 1978 when Chinese reforming and opening-up policy was carried out, the speed of economic development has become very fast, in which the financial industry played a critical role through the commercial banks
Based on Super-SBM Data Envelopment Analysis (DEA) model, this paper investigates the efficiency of 12 Chinese commercial banks from 2005 to 2013 under the consideration of undesirable output, and verifies the truth that considering undesirable outputs can make research result more authentic by comparing with the consequence obtained without considering undesirable output
The results show that the efficiency of Chinese commercial Banks mainly depends on technological progress
Summary
Since 1978 when Chinese reforming and opening-up policy was carried out, the speed of economic development has become very fast, in which the financial industry played a critical role through the commercial banks. The amount of the balance of non-performing loans of Chinese commercial banks continued to rise to RMB 592.1 billion ($ 95.60 billion) in 2013, produced an increase of RMB 99.3 billion ($ 16.03 billion) when compared to that in 2012. This phenomenon indicates that Chinese commercial banks have constant pressure on slashing non-performing loans which could no doubt depress the operating efficiency of Chinese banks. Non-performing loans could reduce lending capacity of banks, which means many good projects may not get the bank’s financial support. In this situation, the whole market economy will be hit. We regard non-performing loans as an undesirable output which is added to the output indicators to analyze the economic efficiency of Chinese commercial banks
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