An Empirical Analysis of Chinese Commercial Banks’ Efficiency and Influencing Factors —Under the Constraint of Non-Performing Loans

Abstract

This article is based on the SBM-Undesirable model to measure and decompose the technical efficiency of commercial banks from 2003 to 2014, and based on panel date to decompose its affecting factors. Our research shows: Since the banking began to reform from 2003, technical efficiency and pure technical efficiency have been significantly increased, the efficiency of scale also had obvious improved before 2008, thereafter growth is more gentle, and even state-owned banks are experiencing a downward trend. Reform impact is more consistent for different types of banks, basically promoting the improvement of the efficiency of the bank. With the advance of market interest rates, internal factors such as management, business innovation become the key to enhance the efficiency of banking sector. If the banks do not continue to reform and still blindly expand the scale of assets, they will not get higher efficiency.