The performance of Chinese commercial banks after accession to the WTO: from an efficiency perspective

Song Han, Peng Jiang and Yanqing Jiang

Journal of Chinese Economic and Business Studies, 2014, vol. 12, issue 3, 253-271

Abstract: This paper investigates the competitiveness of domestic commercial banking in China by evaluating the performance of Chinese commercial banks after China's accession to the World Trade Organization. Based on a panel of 14 banks over the period 2002-2009, we measure the efficiency of Chinese commercial banking by using data envelopment analysis (DEA). Different from other studies, this work applies for four efficiency indicators, namely, social productive efficiency, service efficiency, profit efficiency, and growth efficiency, to investigate the competitive advantages of different banks. Our empirical results show that, compared with joint-stock banks, the levels of social productive efficiency, profit efficiency, and growth efficiency of four state-owned banks are very low while these banks exhibit higher levels of service efficiency. However, when we change our measure of labor input from the number of employees to employee salary, the efficiency of state-owned banks becomes higher than that of the joint-stock banks. In addition, our results also show, among other findings, that corporation structure affects efficiency. However, the specific relationship of state-owned stock and efficiency is not always negative, and a positive relationship between foreign shares and efficiency only holds for product efficiency.

Date: 2014
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DOI: 10.1080/14765284.2014.931424

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