How ownership structure affects bank deposits and loan efficiencies: an empirical analysis of Chinese commercial banks

Abstract

This study explored how dramatic changes in ownership structure and operational technologies have influenced Chinese bank efficiency over the past decade. The study included an empirical analysis using 5 years (2011–2015) of operational data for 71 Chinese commercial banks. Two two-stage meta-frontier data envelopment analysis network models and multiple regression models were used to estimate and analyze impacts of variations in bank ownership structure. The main empirical results show that irrespective of deposits or loans efficiency, State-owned Banks (SOBs) have the highest technology and management levels. In contrast, City Commercial Banks should improve both technology and management levels, narrowing the gap with SOBs and Joint-stock Banks. The deposit efficiency of a bank was found to be mainly influenced by the nature of ownership (national shareholding ratio and the shareholding ratio of the domestic legal entities) and ownership concentration. The loan efficiency of a bank was mainly affected by the nature of ownership (the shareholding ratio of the foreign legal entities) and ownership liquidity.

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Acknowledgements

This research is partially supported by the National Natural Science Foundation of China (Nos. 71501139, 71871153, 71571173, 71631006), Natural Science Funds of Jiangsu Province (No. BK20150307), and Research Project of Philosophy and Social Sciences in Universities of Jiangsu (2018SJA1299).

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Correspondence to Jiasen Sun.

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Liu, X., Sun, J., Yang, F. et al. How ownership structure affects bank deposits and loan efficiencies: an empirical analysis of Chinese commercial banks. Ann Oper Res 290, 983–1008 (2020). https://doi.org/10.1007/s10479-018-3106-6

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Keywords

  • Bank
  • Efficiency
  • Ownership structure
  • Meta-frontier
  • DEA