Super-efficiency of Listed Banks in China and Determinants Analysis (2006-2021)

TL;DR

This paper evaluates the super-efficiency of Chinese listed banks from 2006 to 2021 using a DEA model considering non-performing loans as undesired output, revealing differences among bank types and their determinants.

Contribution

It introduces a super-efficiency DEA model considering NPL as undesired output to analyze bank efficiency and determinants in China.

Findings

State-owned banks outperform joint-stock banks in profitability super-efficiency.

Regional banks benefit from decreased customer concentration and increased reserves.

Ownership concentration reduction benefits all bank types, supporting reforms.

Abstract

This study employs the annual unbalanced panel data of 42 listed banks in China from 2006 to 2021, adopts the non-radial and non-oriented super-efficiency Data envelopment analysis (Super-SBM-UND-VRS based DEA) model considering NPL as undesired output. Our results show that the profitability super-efficiency of State-owned banks and Rural/City Commercial Banks is better than that of Joint-stock Banks. In terms of intermediary efficiency(deposit and loan), state-owned banks have advantage on other two type of banks. The determinants analysis shows that all type of banks significantly benefits from the decrease of ownership concentration which support reformation and IPO. Regional commercial banks significantly benefit from the decrease of customer concentration and the increase of reserves. On the other hand, State-owned banks should increase its loan to deposit ratio while joint-stock banks should do the opposite.