The efficiency of China's financial institutions and their correlation with the economic level

Abstract

Abstract: The super-efficiency DEA methods are employed to evaluate the efficiency of financial institutions in every province of China from 2001 to 2008. The technical efficiency, pure technical efficiency, and scale efficiency of financial institutions are investigated, respectively and then the relationship between the efficiency and economic level of regions is examined using panel data analysis methods. The results show that financial institutions of the majority of provinces are increasing returns to scale and only some of provinces in the eastern China are decreasing returns to scale. The cointegration test results do not imply that there is a long-term cointegration relationship between the efficiency of financial institutions and economic level of regions. Granger causality tests show that economic level is the Granger cause of the efficiency of financial institutions. The results of panel data estimation show that increasing the economic level of a region in China improves the technical efficiency and pure technical efficiency of financial institutions of the region. The higher or lower economic level may be in favor of improving the technical efficiency and pure technical efficiency of financial institutions of a region, but it is harmful to the scale efficiency.

Key words: financial institution, efficiency, economic level, panel data, DEA

CLC Number:

Chen Xiaohong, Wan Guangyu, Cao Yu. The efficiency of China's financial institutions and their correlation with the economic level[J]. Science Research Management, 2011, 32(6): 116-123,132.

References

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