The performance of china's state-owned commercial banks

The global financial crisis has worse hit the banking sector worldwide, in particular in the U.S. and Europe. However, according to the official reports of Chinese commercial banks, there was limited influence of the financial crisis on them. The Chinese banking sector has been continuously stable in developing in terms of risk defence and asset quality. The Chinese banking sector has undertaken a series of reform programmers and regulatory changes since 1978. In addition, as part of the WTO agreement, the foreign financial institutions were allowed to enter into the Chinese markets. In response to the challenges of the entry of foreign banks, the Chinese commercial banks, especially the state-owned commercial banks (SOCBs), have been introducing further reforms to improve the performance of the Chinese banks. It is assumed that the performance of the SOCBs would be significantly improved as a result of a series of reforms and restructures. It is considered that the SOCBs play a dominant role in the Chinese banking sector, and the performance of the SOCBs could impact on the Chinese and even world economies to some extent. Besides, the performance of banks is also an issue of major interest to various stakeholders. Therefore, it is worthwhile to assess the performance of Chinese commercial banks. This research applied quantitative methods to examine the performance of four Chinese SOCBs during the period from 2007 to 2009. The key contribution of this research is to comparatively analyze the financial performance of the SOCBs in terms of income structure, non-performing loans (NPLs) ratio, ROE, and ROA, and to examine the banking efficiency by the Data Envelopment Analysis (DEA)