Evaluating the performance of Chinese commercial banks: A comparative analysis of different types of banks

This paper examines the cost and profit efficiencies of four types of Chinese commercial banks over the period from 2002 to 2010. We find that Chinese banks are, in general, more cost-efficient than profit-efficient, and that the efficiency has improved across all types of banks during the sample period. Bank size, market power, ownership structure and explain listing status are the main determinants of the efficiency of Chinese banks. The evidence from the shadow return on equity suggests that policy makers should be cautious of the adjustment costs imposed by the recapitalization process, which offsets the efficiency gains.