Abstract:

Joint-stock commercial bank has been a principal form of the contemporary commercial bank system. This paper evaluates efficiency of China’s 10 joint-stock commercial banks from 1997 to 2004 using the data envelopment analysis (DEA). The Tobit model is applied to analyze the factors affecting efficiency. The result shows that asset profitability is positively related to efficiency of these banks, while the ratio between loans and deposits is negatively related to the efficiency. Both relations are significant. In order to improve efficiency, banks should improve asset quality and maintain balance between profitability and liquidity. Moreover, performance of listed banks is better than that of non-listed banks in terms of efficiency. Therefore it is beneficial to encourage non-listed banks to go public.

Key words: joint-stock commercial banks; efficiency; data envelopment analysis (DEA); Tobit model