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ID: 088467

Cost efficiency analysis in banking industries of ten Asian cou / Shen, Zhi; Liao, Hailin; Weyman-Jones, Thomas

Shen, Zhi	Journal Article
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2009.

Summary/Abstract

Despite the great achievement of three decades of economic reform, the Chinese banking sector takes the blame for its dysfunctional system, especially the large amount of non-performing loans. The ease of foreign banks' entry set by the WTO from December 2007 raises our concern of the capability of domestic banks to compete against foreign Asian banks. This study attempts to address this issue by measuring the cost efficiency of ten major Asian banking industries from 1998 to 2005 using panel data stochastic frontier approaches. Based on our preferred consistent panel data estimating models, the higher cost efficiency score from including cross-country environmental variables suggests that differences between countries can explain part of the inefficiency. We also find that the overall cost efficiency level of Chinese commercial banks ranks in the fifth place, suggesting that Chinese banks still need to strengthen their ability in competition. Some policy implications are also suggested

Key Words

Panel Data ; Stochastic Frontier Approach ; Banking Efficiency

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ID: 133266

Does property rights reform improve the efficiency of China's s / Wang, Qian; Feng, Xiaochu

Wang, Qian	Journal Article
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Publication

2014.

Summary/Abstract

China's state-owned banks have undergone radical changes over the past two decades, including partial privatization and listing in both the Hong Kong Stock Exchange and the Shanghai Stock Exchange. This paper evaluates the effects of these changes by analyzing the efficiency of Chinese banks over the period 1998-2012 using two frontier techniques and comparative analysis. The findings suggest that the performance and technical efficiency of the Big Four banks improved considerably after property rights reform, but this improvement is not sufficient to keep the banks at the production frontier. Tobit regressions confirm that static ownership effects are negative but that the property rights reform has had significant and positive effects on the technical efficiency of state-owned commercial banks. GDP growth and the financial crisis have had positive effects on the efficiency of Chinese banks, which is more significant for joint stock commercial banks than state-owned commercial banks. The results indicate the value of ownership reforms of state-owned asset management companies and insurance companies and the establishment of a countercyclical capital buffer.

Key Words

Economic Crisis ; China ; Financial Crisis ; Comparative Analysis ; Chinese Economy ; Banking Efficiency ;
Banking System - China ; Commercial Banks ; Property Rights Reform ; State-Owned Bank

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