Market structure,risk taking,and the efficiency of Chinese commercial banks |
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| Institution: | 1. School of Economics and Finance, Xi''an Jiaotong University, 710061, PR China;2. Xi''an Branch, The People''s Bank of China, 710075, PR China;1. Research Institute of Economics and Management, Southwestern University of Finance and Economics, Chengdu, China;2. School of Economics, LeBow College of Business, Drexel University, Philadelphia, PA, USA;3. Research Institute of Economics and Management, Collaborative Innovation Center of Financial Security, Southwestern University of Finance and Economics, Chengdu, China;1. School of Management and Business, Aberystwyth University, Aberystwyth SY23 3AL, UK;2. Hongyuan Securities, Beijing, China;3. Department of Finance and Insurance, Lingnan University, Tuen Mun, New Territories, Hong Kong;4. Business School, University of Edinburgh, Edinburgh, United Kingdom;1. Universidade Católica de Brasília, SGAN 916 Módulo B Avenida W5, Brasília, DF, Brazil;2. Department of Statistics, Purdue University, 250 N. University Street, West Lafayette, IN, USA;3. FGV/EPGE — Escola Brasileira de Economia e Finanças, Graduate School of Economics, Praia de Botafogo 190, Rio de Janeiro, RJ, Brazil |
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| Abstract: | We investigate the impacts of market structure and bank risk taking on the efficiency of Chinese commercial banks, employing a two-stage semi-parametric data envelopment analysis model. Our empirical results show that the intense market competition compels Chinese commercial banks to develop advanced technical experience and skills, thus improving their technical efficiency. Besides, the technical efficiency is positive associated with the risk taking. Since more risk taking implies a credit expansion of Chinese commercial banks based on the soft risk constraint, the improvement of technical efficiency may accompany an accumulation of banking risks in the current financial system of China. |
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