Bank Productivity in China 1997-2007: An Exercise in Measurement

Kent Gerard Matthews () and Nina Zhang
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Nina Zhang: Citibank (China), Cardiff University, Wales

No 252009, Working Papers from Hong Kong Institute for Monetary Research

Abstract: This study examines the productivity growth of the nationwide banks of China and a sample of city commercial, banks for the eleven years to 2007. Estimates of total factor productivity growth are constructed with appropriate confidence intervals, using a bootstrap method for the Malmquist index. The study adjusts for the quality of the output by accounting for the non-performing loans on the balance sheets of the banks and tests for the robustness of the results by examining alternative sets of outputs. The productivity growth of the state-owned commercial banks (SOCBs) is compared with the joint-stock banks (JSCBs) and city commercial banks (CCBs). The weak average growth of TFP of the SOCBs disguises strong technical innovation. As a result, the inefficient banks have a greater efficiency gap to make up. This picture is similar but to a lesser extent for the JSCBs. In contrast the CCBs show strong TFP growth driven by efficiency gains and less so by technical innovation.

Keywords: Bank Efficiency; Productivity; Malmquist Index; Bootstrap (search for similar items in EconPapers)
JEL-codes: D24 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-eff and nep-tra
Date: 2009-07
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