Abstract
This paper develops a new network data envelopment analysis (DEA) model that simultaneously integrates the non-convex metafrontier and undesirable outputs and which is super efficient at performing dynamic network slacks-based measures. The model is employed to discuss the efficiency of 36 commercial banks in China during the years 2010–2014. The efficiency of these banks shows significant heterogeneity and the efficiency of most foreign banks has much room for improvement. Regarding both the non-convex metafrontier and the group frontier, state-owned banks perform the best, followed by joint-stock banks, with foreign banks performing the worst; the same is true for the technology gap ratios. The empirical results produced by the feasible generalized least squares estimation method indicate that liquidity and scale effects exert positive impacts on bank efficiency. An alternative estimation method confirmed that the conclusions were robust.
Highlights
Commercial banks play a central role in a healthy financial system, especially in developing countries, such as Company Ltd. B20 Shinhan Bank (China), where bank performance and stability are vital to the development of the whole economy
Notes: (1) Standard errors are in parentheses; (2) *** p < 0.01, ** p < 0.05, * p < 0.1; (3) Models 1–3 are estimated with the dependent variable period efficiency; models 4–6 are estimated with the dependent variable deposit stage efficiency; models 7–9 are estimated with the dependent variable loan stage efficiency; (4) There are 180 observations for each model and the sample period is 2010–2014
Notes: (1) Standard errors are in parentheses; (2) *** p < 0.01, ** p < 0.05, * p < 0.1; (3) Models 1–3 are estimated with the dependent variable period efficiency; models 4–6 are estimated with the dependent variable deposit stage efficiency; models 7–9 are estimated with the dependent variable loan stage efficiency; (4) There are 180 observations for each model and the sample period is 2010–2014; (5) The standard errors and p-value were generated by the bootstrap method using 2000 replications
Summary
Commercial banks play a central role in a healthy financial system, especially in developing countries, such as China, where bank performance and stability are vital to the development of the whole economy. A major contribution of this paper is to develop a new DEA model that incorporates the non-convex metafrontier, undesirable outputs and super-efficiency into a dynamic network SBM (hereafter NCMeta-US-DNSBM) framework. We measure the sustainability performance of Chinese banks based on the proposed DEA model. A super-efficiency model that can be used to rank the DMUs on the efficient frontier was proposed [32] Following this line, the super-efficiency and slacks-based measures (SBM) were combined [33]. The widely used slacks-based measure (SBM) non-radial model was introduced to treat improvements non-proportionally and handle slacks directly Another motivation of this paper is the lack of empirical studies on the efficiency of banks in mainland China.
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