X-efficiency versus Rent Seeking in Chinese banks: 1997-2006
This study demarcates cost-inefficiency in Chinese banks into X-inefficiency and rent-seeking-inefficiency. A protected banking market not only encourages weak management and X-inefficiency but also public ownership and state directed lending encourages moral hazard and bureaucratic rent seeking. This paper uses bootstrap non-parametric techniques to estimate measures of X-inefficiency and rent-seeking inefficiency for the 4 state owned banks and 10 joint-stock banks over the period 1997-2006. The paper adjusts for the quality of loans by treating NPLs as a negative output. The paper shows that Chinese banks have reduced cost inefficiency and reduced X-inefficiency at a faster rate than rent-seeking inefficiency.
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- Fengxia Dong & Allen Featherstone, 2006.
"Technical and Scale Efficiencies for Chinese Rural Credit Cooperatives: A Bootstrapping Approach in Data Envelopment Analysis,"
Journal of Chinese Economic and Business Studies,
Taylor & Francis Journals, vol. 4(1), pages 57-75.
- Fengxia Dong & Allen Featherstone, 2004. "Technical and Scale Efficiencies for Chinese Rural Credit Cooperatives: A Bootstrapping Approach in Data Envelopment Analysis," Food and Agricultural Policy Research Institute (FAPRI) Publications 04-wp366, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
- Fengxia Dong & Allen Featherstone, 2004. "Technical and Scale Efficiencies for Chinese Rural Credit Cooperatives: A Bootstrapping Approach in Data Envelopment Analysis," Center for Agricultural and Rural Development (CARD) Publications 04-wp366, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Dong, Fengxia & Featherstone, Allen, 2004. "Technical and Scale Efficiencies for Chinese Rural Credit Cooperatives: A Bootstrapping Approach in Data Envelopment Analysis," Staff General Research Papers 11992, Iowa State University, Department of Economics.
- Allen, Franklin & Qian, Jun & Qian, Meijun, 2005.
"Law, finance, and economic growth in China,"
Journal of Financial Economics,
Elsevier, vol. 77(1), pages 57-116, July.
- Laeven, Luc, 1999. "Risk and efficiency in East Asian banks," Policy Research Working Paper Series 2255, The World Bank.
- Peter Bogetoft & Jens Hougaard, 2003.
Journal of Productivity Analysis,
Springer, vol. 20(3), pages 243-271, November.
- Drake, Leigh & Hall, Maximilian J. B., 2003. "Efficiency in Japanese banking: An empirical analysis," Journal of Banking & Finance, Elsevier, vol. 27(5), pages 891-917, May.
- Chen, Xiaogang & Skully, Michael & Brown, Kym, 2005. "Banking efficiency in China: Application of DEA to pre- and post-deregulation eras: 1993-2000," China Economic Review, Elsevier, vol. 16(3), pages 229-245.
- David Hauner, 2004.
"Explaining Efficiency Differences Among Large German and Austrian Banks,"
IMF Working Papers
04/140, International Monetary Fund.
- David Hauner, 2005. "Explaining efficiency differences among large German and Austrian banks," Applied Economics, Taylor & Francis Journals, vol. 37(9), pages 969-980.
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