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A Peer-reviewed scientific articles/A1 Journal article (refereed), original research
      
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Persistent and transient inefficiency : Explaining the low efficiency of Chinese big banks, China Economic Review February ; 2020 (2020). Fungáčová, Zuzana; Klein, Paul-Olivier; Weill, Laurent


Category A Peer-reviewed scientific articles
Sub-category A1 Journal article (refereed), original research
auki Internal authors
All authors as text Fungáčová, Zuzana; Klein, Paul-Olivier; Weill, Laurent 
Number of authors
Status Published
Year of publication 2020 
Date 15.02.2020 
Name of article Persistent and transient inefficiency : Explaining the low efficiency of Chinese big banks 
Name of journal China Economic Review
Volume of issue 59 
Number of issue February ; 2020 
Pages 16 
Abstract A vast literature shows that China's five largest state-owned banks (the Big Five) suffer from low cost efficiency. We offer a new explanation of this situation, by decomposing overall efficiency of Chinese banks into two parts: persistent and transient efficiency. Using the model of Kumbhakar, Lien, and Hardaker (2014) based on the stochastic frontier approach, we measure persistent and transient efficiency for a large sample of 166 Chinese banks over the period 2008–2015. We show that the lower efficiency of China's Big Five banks is almost entirely due to low persistent cost efficiency, indicating structural problems. On the contrary, the Big Five banks transient efficiency is similar to other Chinese banks, reflecting a good aptitude to minimize their costs in the short-term. Our findings support the view that major structural reforms are needed to enhance the efficiency of China's Big Five banks. © 2019 Elsevier Inc.
Free text descriptor in Finnish pankit; tehokkuus; kustannustehokkuus; Kiina; pankkitoiminta 
Free text descriptor in English banks; banking; bank efficiency 
JEL-codes C23; D24; G21 
ISSN / e-ISSN 1043-951X 
auki Internet addresses
Additional information Available online 24 October 2019.
Notes BOFIT DP 16/2018 


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