| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 5047655 | China Economic Review | 2010 | 12 Pages |
This study examines the productivity growth of the nationwide banks of China and a sample of city commercial, banks for the ten years to 2007. Using a bootstrap method for the Malmquist index, estimates of the total factor productivity growth are constructed. Five different models of inputs and outputs based on variants of the Intermediation and Production approaches and non-performing loans are treated as a bad output, are examined for the purpose of arriving at a robust measure. The productivity growth of the state-owned commercial banks (SOCBs) is compared with the joint-stock banks (JSCBs) and city commercial banks (CCBs). In general, average TFP growth has been neutral over the period for the SOCBs and JSCBs but positive for the CCBs in the second part of the period. Efficiency gains (catch-up) were obtained through cost reduction and technical innovation was associated with greater diversification of revenue away from interest earnings. The opening up of the banking market has not led to a discernible improvement in bank productivity growth.
Research highlightsâºStandard DEA measures of bank productivity growth are compared with measures obtained from bootstrap. âºThe bootstrap measures show that TFP growth for the state-owned and joint-stock banks barely increased over 1998-2007. âºStrong TFP growth was measured by the city commercial banks based on efficiency gains. âºSignificant technical innovation was associated with the large banks and efficiency gains were associated with cost reduction. âºThere is no evidence that TFP growth improved in the second half of the period.
