Abstract
This paper selects 15 Chinese commercial banks as the research sample, using stochastic frontier approach, setting Trans-log Production Function. The paper firstly measures the efficiency of commercial banks, and the results show that the efficiency level of Chinese commercial banks is on the rise from 2007 to 2016, and the efficiency of state-owned banks is higher than that of joint-stock banks. Secondly, the paper studies the influence factors of the efficiency of Chinese commercial banks in the view of banks’ own factors, industry factors, Internet financial development factors. The results show that the non-performing loan ratio level and the Internet financial development are negatively related to the bank efficiency, and competition of market is positively associated with the bank efficiency, and the structure of property rights will also significantly affect the performance of commercial banks.
Highlights
The financial industry plays a vital role in Chinese economic development, and commercial banks occupy an absolutely important position in the financial system
The results show that the non-performing loan ratio level and the Internet financial development are negatively related to the bank efficiency, and competition of market is positively associated with the bank efficiency, and the structure of property rights will significantly affect the performance of commercial banks
From the analysis of commercial banks’ efficiency measurement results, we can see that the efficiency of commercial banks in China are on the rise which accords with the development of Chinese banking industry in the past 10 years
Summary
The financial industry plays a vital role in Chinese economic development, and commercial banks occupy an absolutely important position in the financial system. The data from China Banking Regulatory Commission and National Bureau of Statistics of China show that, the credit balance of the banking sector accounts for over 90% of the credit balance of financial institutions. The increment of social financing in China was 194,443 billion yuan, and RMB loans were 138,432 billion yuan, accounting for 71.2% of the increment in social financing. By the end of 2016, the total assets of the banking financial institutions were 232.3 trillion yuan, accounting for 312% of the total GDP of 2016. The asset size has increased by 341% over 2007.
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