Research on the Efficiency of Commercial Banks in China: A resource-based two-stage DEA and smoothed bootstrap approach

This paper constructs a resource-based two-stage DEA model dividing the overall fund utilization process of commercial banks into two dependent sub-processes, fund raising and fund profitability processes so that the efficiency can be evaluated more appropriately and acurately by combing a smoothed bootstrap approach. The efficiency of the 12 largest commercial banks in China, including the 'big 4' and 8 listed joint-venture commercial banks during 2004 and 2008 is studied. It is found out that these two types of banks acted differently in fund raising and fund profitability remaining highly volatile and show a high correlation with the business cycle, monetary policies and internal governance.