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WHAT CAUSES THE EFFICIENCY AND THE TECHNOLOGY GAP UNDER DIFFERENT OWNERSHIP STRUCTURES IN THE CHINESE BANKING INDUSTRY?
Author(s) -
Lee ChiChuan,
Huang TaiHsin
Publication year - 2019
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12409
Subject(s) - balance sheet , cost efficiency , foreign ownership , business , technology gap , banking industry , stochastic frontier analysis , frontier , balance (ability) , economics , industrial organization , monetary economics , financial system , finance , foreign direct investment , microeconomics , macroeconomics , production (economics) , medicine , history , archaeology , computer science , international trade , physical medicine and rehabilitation , operating system
This paper estimates and compares the cost efficiency of the Chinese banking industry among different ownership types for the period 2003–2014, using the stochastic metafrontier model. We find that foreign banks have the lowest cost frontier, while state‐owned commercial banks undertake the least sophisticated technology. Moreover, the results of the upward trend in the technology gap ratio (TGR) and in metafrontier cost efficiency support that a more open financial market is able to enhance banking efficiency. As for the role of environmental conditions, off‐balance sheet items, non‐performing loans, and financial market structure significantly impact the TGRs of different bank types. ( JEL C51, G21, D24)