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This paper examines the performance of Chinese commercial banks before, during and after the 2007–2008 global financial crisis and China's 4 trillion renminbi stimulus plan during 2008–2010. Fully nonparametric methods are used to estimate technical efficiencies. Recently-developed statistical results are used to test for changes in efficiencies as well as productivity over time, and to test for changes in technology over time. We also test for differences in efficiency and productivity between big and small banks, and between domestic and foreign banks. We find evidence of non-convexity of banks' production set. Our results suggest that technical efficiency declined at the start of the global financial crisis and again during 2011–2012 after enactment of the stimulus plan. Although efficiency recovered somewhat during 2013–2014, China's banks ended with lower technical efficiency on average in 2014 than in 2007. We find that productivity declined during 2008–2009, increased during 2013–2014, but as with efficiency ended lower on average in 2014 than in 2007. We find compelling evidence that big banks were more efficient than small banks throughout 2007–2014, and in most years also were more productive. Finally, domestic banks were on average more efficient than foreign banks in 2007, but foreign banks were more efficient than domestic banks in 2014. Similarly, foreign banks were on average more productive than domestic banks in 2007, but less productive than domestic banks in 2012–2014. [ABSTRACT FROM AUTHOR]

The current study proposes a new DEA model to evaluate the efficiency of 39 Chinese commercial banks over the period 2010–2018. The paper also, in the second stage, investigates the inter-relationships between efficiency and some bank-specific variables (i.e. bank profitability, bank size, expenses management, traditional business and non-traditional business) under the Robust Endogenous Neural Network Analysis. The findings suggest that the sample of Chinese banks experiences a consistent increase in the level of bank efficiency up to 2015; the efficiency score is 0.915, after which the efficiency level declines and then experiences a slight volatility, while finally ending up with an efficiency score of 0.746 by the end of 2018. We also find that among different bank ownership types, the state-owned banks have the highest efficiency, the rural commercial banks are found to be least efficient and the foreign banks experience the strongest volatility over the examined period. The second-stage analysis shows that bank size exerts a positive influence on the development of non-traditional banking business and a proactive expense management, bank size and non-traditional businesses have a positive impact on efficiency levels, while bank profitability, traditional businesses and expenses management have negative influences on bank efficiency. [ABSTRACT FROM AUTHOR]

Although there is a growing number of research articles investigating the performance in the banking industry, research on Chinese banking efficiency is rather focused on discussing rankings to the detriment of unveiling its productive structure in light of banking competition. This issue is of utmost importance considering the relevant transformations in the Chinese economy over the last decades. This is a development of a two-stage network production process (production and intermediation approaches in banking, respectively) to evaluate the efficiency level of Chinese commercial banks. In the second stage regression analysis, an integrated Multi-Layer Perceptron/Hidden Markov model is used for the first time to unveil endogeneity among banking competition, contextual variables, and efficiency levels of the production and intermediation approaches in banking. The competitive condition in the Chinese banking industry is measured by Panar–Rosse H-statistic and Lerner index under the Ordinary Least Square regression. Findings reveal that productive efficiency appears to be positively impacted by competition and market power. Second, credit risk analysis in older local banks, which focus the province level, would possibly be the fact that jeopardizes the productive efficiency levels of the entire banking industry in China. Thirdly, it is found that a perfect banking competition structure at the province level and a reduced market power of local banks are drivers of a sound banking system. Finally, our findings suggest that concentration of credit in a few banks leads to an increase in bank productivity. [ABSTRACT FROM AUTHOR]