| Summary: | Abstract:
The contagion of global financial crisis shocks the world’s banking industry. China as the world’s second largest economy and famous emerging market has improving but comparatively immature banking system. The crisis could enlarge risk exposure to the banking industry. Whether the global financial crisis affects the efficiency of Chinese commercial banks is one of the objectives of this study.
Employing a stochastic frontier analysis, this study investigates the Chinese commercial banks’ profit efficiency by using the sample data of 15 listed Chinese commercial banks from 2006 to 2010. The result of empirical analysis proves that the globally financial crisis has some affection to the efficiency of Chinese banks. However, it is not significant. By doing the comparative analysis between using two models one without risk factors and one with risk factors, the result demonstrate that estimated profit efficiency can be significantly overestimated without considering risk factors. State-owned banks perform better than joint- stock commercial banks and city commercial banks.
Key words: Chinese commercial banks, global financial crisis, Stochastic Frontier Analysis, profit efficiency, comparative analysis
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