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The impact of risk on technical and scale efficiency: empirical evidence from the China banking sector

By employing the data envelopment analysis (DEA) method, this paper examines the impact of risks on China banks’ technical and scale efficiency estimates. To do so, we follow the procedures set out by Drake and Hall (2003) to include risk factor as a non-discretionary input variable. The results ind...

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Main Author: Sufian, Fadzlan
Format: Article
Language:English
Published: Inderscience Publishers 2010
Subjects:
HG1501 Banking
Online Access:http://irep.iium.edu.my/5259/1/IJBPM120103_SUFIAN.pdf
http://irep.iium.edu.my/5259/
http://www.inderscience.com/browse/index.php?journalID=3&year=2010&vol=12&issue=1
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spelling my.iium.irep.52592011-12-20T08:06:11Z http://irep.iium.edu.my/5259/ The impact of risk on technical and scale efficiency: empirical evidence from the China banking sector Sufian, Fadzlan HG1501 Banking By employing the data envelopment analysis (DEA) method, this paper examines the impact of risks on China banks’ technical and scale efficiency estimates. To do so, we follow the procedures set out by Drake and Hall (2003) to include risk factor as a non-discretionary input variable. The results indicate that scale inefficiency outweighs pure technical inefficiency in determining the China banking sector’s technical efficiency during the earlier years, while the opposite is true during the latter years. The empirical findings suggest that potential economies of scale to be overestimated in the range of 10% to 22.5% when risk factor is excluded. The inclusion of risk factor has benefited the city commercial banks the most, while the joint stock commercial banks the least. The findings from the multivariate regression analysis indicate that technically efficient banks are larger, relatively better capitalised, have smaller market share and on average have lower amount non-performing loans. Inderscience Publishers 2010 Article REM application/pdf en http://irep.iium.edu.my/5259/1/IJBPM120103_SUFIAN.pdf Sufian, Fadzlan (2010) The impact of risk on technical and scale efficiency: empirical evidence from the China banking sector. International Journal of Business Performance Management, 12 (1). pp. 37-71. ISSN 1741-5039 ; 1368-4892 http://www.inderscience.com/browse/index.php?journalID=3&year=2010&vol=12&issue=1 DOI: 10.1504/IJBPM.2010.036041
institution Universiti Islam Antarabangsa Malaysia
building IIUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider International Islamic University Malaysia
content_source IIUM Repository (IREP)
url_provider http://irep.iium.edu.my/
language English
topic HG1501 Banking
spellingShingle HG1501 Banking
Sufian, Fadzlan
The impact of risk on technical and scale efficiency: empirical evidence from the China banking sector
description By employing the data envelopment analysis (DEA) method, this paper examines the impact of risks on China banks’ technical and scale efficiency estimates. To do so, we follow the procedures set out by Drake and Hall (2003) to include risk factor as a non-discretionary input variable. The results indicate that scale inefficiency outweighs pure technical inefficiency in determining the China banking sector’s technical efficiency during the earlier years, while the opposite is true during the latter years. The empirical findings suggest that potential economies of scale to be overestimated in the range of 10% to 22.5% when risk factor is excluded. The inclusion of risk factor has benefited the city commercial banks the most, while the joint stock commercial banks the least. The findings from the multivariate regression analysis indicate that technically efficient banks are larger, relatively better capitalised, have smaller market share and on average have lower amount non-performing loans.
format Article
author Sufian, Fadzlan
author_facet Sufian, Fadzlan
author_sort Sufian, Fadzlan
title The impact of risk on technical and scale efficiency: empirical evidence from the China banking sector
title_short The impact of risk on technical and scale efficiency: empirical evidence from the China banking sector
title_full The impact of risk on technical and scale efficiency: empirical evidence from the China banking sector
title_fullStr The impact of risk on technical and scale efficiency: empirical evidence from the China banking sector
title_full_unstemmed The impact of risk on technical and scale efficiency: empirical evidence from the China banking sector
title_sort impact of risk on technical and scale efficiency: empirical evidence from the china banking sector
publisher Inderscience Publishers
publishDate 2010
url http://irep.iium.edu.my/5259/1/IJBPM120103_SUFIAN.pdf
http://irep.iium.edu.my/5259/
http://www.inderscience.com/browse/index.php?journalID=3&year=2010&vol=12&issue=1
_version_ 1643605502479826944
score 13.211869

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