EconPapers    
Economics at your fingertips  
 

Efficiency measures of the Chinese commercial banking system using an additive two-stage DEA

Ke Wang, Wei Huang, Jie Wu and Ying-Nan Liu

Omega, 2014, vol. 44, issue C, 5-20

Abstract: Measuring and improving the efficiency of the Chinese commercial banking system has recently attracted increasing interest. Few studies, however, have adopted the two-stage network DEA to explore this issue in the Chinese context. Because the entire operational process of the banking system could be divided into two sub-processes (deposit producing and profit earning), the evaluation of the sub-process efficiencies could be used to assist in identifying the sources of the inefficiency of the entire banking system. In this study, we utilize the network DEA approach to disaggregate, evaluate and test the efficiencies of 16 major Chinese commercial banks during the third round of the Chinese banking reform period (2003–2011) with the variable returns to scale setting and the consideration of undesirable/bad output. The main findings of this study are as follows: (i) the two-stage DEA model is more effective than the conventional black box DEA model in identifying the inefficiency of banking system, and the inefficiency of the Chinese banking system primarily results from the inefficiency of its deposit producing sub-process; (ii) the overall efficiency of the Chinese banking system improves over the study period because of the reform; (iii) the state-owned commercial banks (SOBs) appear to be more overall efficient than the joint-stock commercial banks (JSBs) only in the pre-reform period, and the efficiency difference between the SOBs and the JSBs is reduced over the post-reform period; (iv) the disposal of non-performing loans (NPLs) from the Chinese banking system in general explains its efficiency improvement, and the joint-equity reform of the SOBs specifically increases their efficiencies.

Keywords: Chinese commercial banks; Data envelopment analysis (DEA); Efficiency decomposition; Two-stage DEA (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (132)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305048313000959
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Efficiency measures of the Chinese commercial banking system using an additive two-stage DEA (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jomega:v:44:y:2014:i:c:p:5-20

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

DOI: 10.1016/j.omega.2013.09.005

Access Statistics for this article

Omega is currently edited by B. Lev

More articles in Omega from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-19
Handle: RePEc:eee:jomega:v:44:y:2014:i:c:p:5-20