Performance of Commercial Banks in China Based on Data Envelopment Analysis (DEA)

  • Pu Weiwei Infrastructure University Kuala Lumpur, MALAYSIA
  • Ruhanita Maelah Universiti Kebangsaan Malaysia, Bangi, Selangor, MALAYSIA
  • Mohd Dan Bin Jantan Infrastructure University Kuala Lumpur, MALAYSIA
Keywords: Commercial bank, Performance, Data envelopment analysis, China

Abstract

China is at a stage where it encourages the inflows of international funds and accelerates its initiatives in the opening up of its financial market. The initiatives encompass of encouraging international funds and financial establishments to join the local financial market, and improving the financial system’s competitiveness and vigour. As banks are the main player in financial industry, their performance and efficiency attract the interest of scholars and practitioners. At the same time, in recent years, the overall performance data of the banking industry is insufficient, and there is no systematic statistical analysis. This study will examine the overall performance of Chinese commercial banks through data from selected banks. Data during the years 2010-2019 from 29 commercial banks comprising of large, joint-stock and city banks are examined. The DEA method has been employed to calculate the performance score of bank operation, and identify the influencing factors of the operating performance. This study uses preliminary input indicators to finally determine that the input indicators are total assets and total operating expenses, and the output indicators are loans and net income. The results indicate that big commercial banks have higher performance scores as compared with joint-stock banks and city commercial banks; while joint-stock banks record better performance scores than city commercial banks.

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Published
2021-10-12
How to Cite
Weiwei, P., Maelah, R., & Jantan, M. D. (2021). Performance of Commercial Banks in China Based on Data Envelopment Analysis (DEA). Management Research Journal, 10(2), 65-77. https://doi.org/10.37134/mrj.vol10.2.5.2021