Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/83930 
Year of Publication: 
2007
Series/Report no.: 
Cardiff Economics Working Papers No. E2007/5
Publisher: 
Cardiff University, Cardiff Business School, Cardiff
Abstract: 
The existing Chinese banking system was born out of a state-planning framework focussed on the funding of state-owned enterprises. Despite the development of a modern banking system, numerous studies of Chinese banking point to its high level of average inefficiency. Much of this inefficiency relates to the high level of non-performing loans held on the banks books. This study argues that a significant component of inefficiency relates to a defunct bureaucratic incentive structure. Using bootstrap non-parametric techniques the paper decomposes cost-inefficiency into X-inefficiency and rational inefficiency caused by bureaucratic rent seeking. In contrast to other studies of the Chinese banking sector, the paper argues that a change in the incentive structure and the competitive threat of the opening up of the banking market in 2007 has produced reduced inefficiency and improved performance.
Subjects: 
Bank Efficiency
China
X-inefficiency
DEA. Bootstrapping
JEL: 
D23
G21
G28
Document Type: 
Working Paper

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