X-Efficiency of Commercial Banks in China

This analysis investigates the efficiency of Chinese commercial banks between 1997 to 2002. DEA method is employed to estimate overall cost, technical, allocative, pure technical and scale efficiency scores. In the second stage regression, ownership, market share and technology are chosen as the underlying driving factors. To minimize the bias arising from the inherent dependency problem, the bootstrap technique is used instead of ordinary multi-linear regression. The results indicate that Chinese banking efficiency experienced an upward movement during the examined period. Generally, the state-owned banks are more inefficient than joint equity banks. This is consistent to the popular viewpoint. State-owned ownership is demonstrated the significant factor which drives bank efficiency down. This may predicts the ongoing reform, which aims to transform state-owned banks into joint equity ones, progresses toward a bright future.