Abstract:

China has become a member of WTO since 2001, which means Chinese commercial banks will be in the face of direct competition from foreign banking institutions by the end of the protective transitional period from 2002 to 2006. In order to enhance overall competitiveness, most Chinese commercial banks accelerate the pace of reform and development during this period. By using the data envelopment analysis (DEA), this paper empirically tests the efficiency changes of Chinese commercial banks from 2002 to 2006. The results indicate that the efficiencies of Chinese commercial banks increase during the transitional period, but still leave a good deal to be improved. By comparison, joint-stock and city commercial banks have higher efficiency than state-owned commercial banks. In fact, the regression results suggest that non-performing loan ratio is the main factor affecting efficiencies of Chinese commercial banks.