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Bank Productivity in China 1997-2007: An Exercise in Measurement

  • Kent Matthews

    (Hong Kong Institute for Monetary Research, Cardiff University, Wales)

  • Nina Zhang

    (Citibank (China), Cardiff University, Wales)

This study examines the productivity growth of the nationwide banks of China and a sample of city commercial, banks for the eleven years to 2007. Estimates of total factor productivity growth are constructed with appropriate confidence intervals, using a bootstrap method for the Malmquist index. The study adjusts for the quality of the output by accounting for the non-performing loans on the balance sheets of the banks and tests for the robustness of the results by examining alternative sets of outputs. The productivity growth of the state-owned commercial banks (SOCBs) is compared with the joint-stock banks (JSCBs) and city commercial banks (CCBs). The weak average growth of TFP of the SOCBs disguises strong technical innovation. As a result, the inefficient banks have a greater efficiency gap to make up. This picture is similar but to a lesser extent for the JSCBs. In contrast the CCBs show strong TFP growth driven by efficiency gains and less so by technical innovation.

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Paper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 252009.

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Length: 38 pages
Date of creation: Jul 2009
Date of revision:
Handle: RePEc:hkm:wpaper:252009
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  1. Kent Matthews & Xu Zhang & Jianguang Guo, 2009. "Nonperforming Loans and Productivity in Chinese Banks, 1997-2006," Chinese Economy, M.E. Sharpe, Inc., vol. 42(2), pages 30-47, March.
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  23. Scheel, Holger, 2001. "Undesirable outputs in efficiency valuations," European Journal of Operational Research, Elsevier, vol. 132(2), pages 400-410, July.
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