Efficiency measurement and decomposition for the Chinese state-owned commercial banks at the provincial level

Abstract

This study adopts a bank production function approach to the measurement of efficiency of the Chinese state-owned commercial banking groups at the provincial level from 1998 to 2003. Applying Data Envelopment Analysis and efficiency decomposition analysis, this paper for the first time presents detailed empirical evidence on the technical efficiencies of the Chinese state-owned commercial banks across both the provinces and banking groups. The empirical evidence has revealed limited effects of the banking reform programmes and highlighted the need to encourage spatial competition and corporate governance reform across Chinese provinces and to take differential strategies to further improve operational efficiency at the provincial branch level.