Cost Efficiency of Chinese Commercial Banks - A Stochastic Frontier Analysis
LI, YAJING (2015) Cost Efficiency of Chinese Commercial Banks - A Stochastic Frontier Analysis. [Dissertation (University of Nottingham only)]
This study estimates the cost efficiency of Chinese commercial banks by employing stochastic frontier analysis. The main objective is to assess cost efficiency by applying the most recent post-reform data from 2004 to 2014. A two-stage regression model is used to examine the impact from potential influential factors on cost efficiency. Overall, the estimated cost efficiency is 77.75% compared with “best practice” banks in the selected sample. Foreign-owned commercial banks are found to be the most efficient. Macroeconomic factors do not show a significant influence on cost efficiency. A positive correlation between bank size, return on assets (ROA) and equity ratio is found, and the loan-deposit ratio is negatively related to cost efficiency.
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