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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| Format: | Article |
| Language: | English |
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Inderscience Publishers
2010
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| Online Access: | http://irep.iium.edu.my/5259/1/IJBPM120103_SUFIAN.pdf |
| _version_ | 1796875234673950720 |
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| author | Sufian, Fadzlan |
| author_facet | Sufian, Fadzlan |
| author_sort | Sufian, Fadzlan |
| collection | IIUM |
| 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. |
| first_indexed | 2024-03-05T22:35:49Z |
| format | Article |
| id | oai:generic.eprints.org:5259 |
| institution | International Islamic University Malaysia |
| language | English |
| last_indexed | 2024-03-05T22:35:49Z |
| publishDate | 2010 |
| publisher | Inderscience Publishers |
| record_format | dspace |
| spelling | oai:generic.eprints.org: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 PeerReviewed 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 |
| spellingShingle | HG1501 Banking Sufian, Fadzlan The impact of risk on technical and scale efficiency: empirical evidence from the China banking sector |
| title | 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_short | 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 |
| topic | HG1501 Banking |
| url | http://irep.iium.edu.my/5259/1/IJBPM120103_SUFIAN.pdf |
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