Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/65742
Authors: 
Matthews, Kent
Xiao, Zhiguo
Zhang, Xu
Year of Publication: 
2009
Series/Report no.: 
Cardiff Economics Working Papers E2009/13
Abstract: 
According to a frequently cited finding by Berger et al (1993), X-inefficiency contributes 20% to cost-inefficiency in western banks. Empirical studies of Chinese banks tend to place cost-inefficiency in the region of 50%. Such estimates would suggest that Chinese banks suffer from gross cost inefficiency. Using a nonparametric bootstrapping method, this study decomposes cost-inefficiency in Chinese banks into X-inefficiency and allocative-inefficiency. It argues that allocative inefficiency is the optimal outcome of input resource allocation subject to enforced employment constraints. The resulting analysis suggests that allowing for rational allocative inefficiency; Chinese banks are no better or worse than their western counterparts.
Subjects: 
Bank Efficiency
China
X-inefficiency
DEA
Bootstrapping
JEL: 
D23
G21
G28
Document Type: 
Working Paper

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