Risk Management and Managerial Efficiency in Chinese Banks: A Network DEA Framework
AbstractRisk Management in Chinese banks has traditionally been the Cinderella of its internal functions. Political stricture and developmental imperative have often overridden standard practice of risk management resulting in large non-performing loan (NPL) ratios. One of the stated aims of opening up the Chinese banks to foreign strategic investment is the development of risk management functions. In recent years NPL ratios have declined through a mixture of recovery, asset management operation and expanded balance sheets. However, the training and practice of risk managers remain second class compared with foreign banks operating in China. This paper evaluates bank performance using a Network DEA approach where an index of risk management practice and an index of risk management organisation are used as intermediate inputs in the production process. The two indices are constructed from a survey of risk managers in domestic banks and foreign banks operating in China. The use of network DEA can aid the manager in identifying the stages of production that need attention.
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Bibliographic InfoPaper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 102011.
Length: 37 pages
Date of creation: Mar 2011
Date of revision:
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Risk Management; Risk Organisation; Managerial Efficiency; Network DEA;
Other versions of this item:
- Matthews, Kent, 2013. "Risk management and managerial efficiency in Chinese banks: A network DEA framework," Omega, Elsevier, Elsevier, vol. 41(2), pages 207-215.
- Matthews, Kent, 2010. "Risk Management and Managerial Efficiency in Chinese Banks: A Network DEA Framework," Cardiff Economics Working Papers E2010/1, Cardiff University, Cardiff Business School, Economics Section, revised Apr 2010.
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-30 (All new papers)
- NEP-BAN-2011-04-30 (Banking)
- NEP-CSE-2011-04-30 (Economics of Strategic Management)
- NEP-EFF-2011-04-30 (Efficiency & Productivity)
- NEP-RMG-2011-04-30 (Risk Management)
- NEP-TRA-2011-04-30 (Transition Economics)
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