Empirical Studies of the Chinese Banking Industry

This study trys to find the production behaviors of the Chinese banking industry. Two frameworks (fixed effects model and random effects model) generalized from Cobb-Douglas production function, stochastic frontier model and translog model are carried out for different purposes. Constant returns to scale is found for the whole industry, while smaller non-state-owned banks appear to have increasing returns to scale. The average technical inefficiency is found to be 46.5%, which is much higher than their international peers. State-owned banks are found to be more efficient than non-stateowned banks in production behavior.departmental bulletin pape