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On the analysis and study of the state-owned commercial bank competition

Author: YiFangLei DingLiLi WangCheng From: www.yourpaper.net Posted: 2010-05-31 23:04:57 Read:
Keywords thesis: economies of scale economies of scope effect, structure effect
Abstract: microscopic competition the principal point of view, China's state-owned commercial banks competitive goal for the pursuit of profit maximization.But with the commercial development, the state-owned commercial banks from the micro competition gradually in the process of competition goal.The bank reform time as the context, analysis of effect of economy of scale, scope economy effect and structural effect of bank restructuring and listing of state-owned commercial banks, competitive behavior alienation.
, the competitive advantage of bank
Enterprises in order to obtain the ability to transcend competitors, in order to achieve the improvement of operation performance, is bound to create their own competitive advantage.The author proposed a competitive advantage in the field of economics mainly refers to the difference of competitiveness, its essence is economic efficiency or productivity.Therefore, from the dynamic and development point of view, the essence of competitive advantages is the efficiency advantage, if the banks have the right competitive strategy can maximize its relative efficiency.Because the bank is a special enterprise.The popular theory is that the effect of scale economy and scope economy effect and structure effect is essential for improving the efficiency of.
Economies of scale effect of bank refers to with the expansion of business scale, the number of banks, branches, and the unit operation cost, unit revenue rising phenomenon.The earliest study of banking industry scale economy effect is Bohn Houstton (Benston, 1972), he thought: in the same given other conditions, the bank regardless of its size, doubled in size, the average cost will be decreased by 5% to 8%.Benton (Benton, 1982) and Yoshibayashi Ne (Gilligua, 1984), the study also showed that some economies of scale exist in the banking industry.
The economic effect of bank is caused by a bank operating varieties or marginal revenue increase or decline in the marginal cost.According to the new classical economic theory, as the financial services industry "asset specificity" degree is low, so its product or service can be transferred by way of cooperation and other resources, optimize the allocation of resources in the broader economy, so as to achieve more efficient use of resources has a purpose.The United States banking industry and mixed operation pattern change is an important manifestation of this idea.
Bank structure effect refers to the impact of changes in liabilities and owners' equity structure of assets, the profitability of commercial banks.Because the interest on the debt capital payment can be used as a deduction in pre-tax income, has obvious tax shield and financial leverage, but the interest payments will increase the bank's operating costs.Interest income assets and equity ratio will also affect the bank's income, so banks will have to arrange reasonable structure.After 1984, with the four specialized banks as the main body of the market competition pattern is preliminary form, the bank's own interests are reflected more fully, and the competition between banks is more and more performance for their respective interests in the competition.With the commercialization of the deep, the four major state-owned banks from competition subject goal gradually in the process of competition, presenting alienation (Dissim.ilation) characteristics, namely the inefficient operation characteristics.
The competition of two, the first stage of Alienation: resources to expand the bank pursue scale economic benefit of
Through the rapid expansion of institutions and personnel to achieve competitive advantage is called the institutions, personnel competition.Then from 1984 to 1997 for more than a decade, why China's state-owned commercial banks have a kind of expanding the size of the impulse? Because banking products, service homogeneity determines a bank can be increased by providing products, services, reduce service unit product, cost, increase income.Therefore, the state-owned commercial banks to expand the scope of product supply and service become very important.Moreover, in the modern bank deposit reserve system, individual commercial bank scale is larger, more likely to deposit to create a multiple limit, commercial bank can realize scale utility maximization (Wang Zhenshan, 2000).Thus, the big banks have the advantage of scale, can be through the expansion of the scale, reach the advantage of reducing the cost.So the State-owned Commercial Bank of our country 10 years of expansion, whether to achieve the scale advantage? Can be analyzed from two aspects: one is the conventional indicators analysis; two is a comprehensive index analysis.
(a) conventional indicators analysis
1 state-owned commercial banks scale and profit ratio
From 1984 to 1996, the state-owned commercial banks in terms of scale and the number of the persons have undergone rapid expansion.In 1984, the total number of state-owned commercial banks into 53898, staff number is 847300 people, and by 1996 the total number of state-owned commercial bank institution into 160142, staff numbers 2744000 people, increased by 2.97 times and 3.24 times, while assets increased by 3.12 times, 10 times the deposit growth, loan growth. 7 times.
The bank's main resource competition will make the competitiveness of state-owned commercial banks enhance the look from the surface, but from Figure 1, can be found in 1989 - 1999, the state-owned commercial banks, the number of scale growth mechanism although showed a rising trend, but the after-tax profit growth has declined.For example, the state-owned commercial bank total assets increased by 14 times, but profits rose 50%, showing significant diseconomies of scale.In order to obtain a more objective evaluation, it can be combined with the profit rate of asset, capital profit rate as the content analysis.The bank as a financial enterprise has its particularity, its profit rate is generally very low, international commercial banks, the best level of about 3% (Li Huamin, 2001).But we will find the state-owned commercial banks, asset profit rate at a very low level, the average is only 0.33%, capital profit rate is only 6.97%.These two indicators, is still showing relationship assets of state-owned commercial banks of our country extremely distorted.To accurately reflect the efficiency of operation, in addition to scale and profit ratio, must be linked to the per capita indicators for further analysis.

Comparison of 2 per capita and institutions operating indicators
The principle of contrast, analysis of per capita operating indicators of state-owned commercial banks.Based on the data of 1997 to 1999, because the direct target before 1997, the State-owned Commercial Bank of our country is the expansion of the scale, the branch setting.Therefore, after the 1997 years of average efficiency index can fully show the effect of this expansion.From table 1 shows, joint-stock commercial banks, the average profit in 1997 was 21 times of the state-owned commercial bank, per capita deposits of 3.25 times, 15 times in 1998 and 1999 2.54 times, 9 times and 2.51 times.We will find the joint-stock banks average efficiency index was significantly higher than that of state-owned commercial banks, but the gap is gradually narrowing.The reason is that since 1997, in addition to the impact of the Asian financial crisis, the overall size of the expansion, caused the banking competition 13 benefits of increased, total bank profit growth and deposit growth can not keep up with the industry scale expansion speed, has brought the industry average profit rate of natural decline.In 1998 the country issuing bonds, to some extent alleviate the declining trend, indicating that competition behavior of commercial bank expansion did not reach the unit operation cost is decreased, the scale effect unit revenues rise.Thus the state-owned commercial bank competition behavior has changed alienation - non profit orientation.

(two) comparative analysis of comprehensive index
In recent years the international community on Evaluation of performance of banks with bank efficiency measure.DEA (DataEnvelopmentAnalysis) method is often adopted abroad, it can be divided into technical efficiency (, IE) and (AE) the allocation efficiency and technical efficiency can be divided into pure technical efficiency (FIE) and scale efficiency (SE).Based on the determination of the technical efficiency of banks in the past, with China's state-owned banks, the Bank of Spain for comparison, analysis of the scale efficiency and allocative efficiency contribution to the efficiency of the bank.Horizontal comparison will find, the State-owned Commercial Bank of our country 3 years the average technical efficiency of 0.28, while the average technical efficiency of Spanish banks, 0.70, is 2.5 times as big as ours, and the scale efficiency and allocative efficiency is respectively 2.3 times and 1.4 times, showed China's banks over the past few years competition expansion, not only to achieve the scale effect, the bank efficiency.
A longitudinal comparative analysis, JoseM.Pastor (1999) using DEA grate Spain in 1993 - 1995, banking efficiency, results show that the technical efficiency, pure technical efficiency in these 3 years, the average scale efficiency is 0
.7014, 0.8292, 0.8453, the technical efficiency and scale efficiency from 1993 to 1994 decreased by 0.0123, 8 and 0.059 pure technical efficiency increased by O.0422, it is not difficult to see that the efficiency of this technology is more from scale inefficiency.Also our state-owned commercial banks from 1997 to 1998 from the invalid technical efficiency pure technical efficiency, scale efficiency, but digging deeper, we will find that 1999 technical efficiency for O.27, the allocation efficiency is O.71, while the scale efficiency is only O.34, which means that the size is invalid is the real reason in China Technology of state-owned commercial banks is invalid.
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