Cost Efficiency Of Chinese Banks-Using Stochastic Frontier Analysis
This paper compares the cost efficiency of state-owned banks and joint-stock banks in China by stochastic frontier
analysis, and the cost efficiency is investigated based on panel data of Chinese banks from 2000 to 2011. There are two
inputs, namely the average price of loanable funds and the average price of business investment. Besides, there are also three
outputs, including loans outstanding, non-interest income and investment with securities. According to the results, the cost
efficiency of Chinese banks is more efficient than before. Moreover, the efficiency of joint-stock banks is lower than that of
state-owned banks. However, the difference between them has been less in recent years.
Key Word- cost efficiency, stochastic frontier analysis, Chinese banks