Assessing Chinese Commercial Bank Technical Efficiency Using Parametric Hyperbolic Distance Function Approach

Vishwa Nath Maurya^1, , Xuan Fang² and Feng Yang²

¹Department of Mathematics and Statistics, School of Science & Technology, The University of Fiji, Fiji

²School of Management, University of Science and Technology of China, China

Cite this paper:
Vishwa Nath Maurya, Xuan Fang and Feng Yang. Assessing Chinese Commercial Bank Technical Efficiency Using Parametric Hyperbolic Distance Function Approach. American Journal of Applied Mathematics and Statistics. 2014; 2(6A):20-25. doi: 10.12691/ajams-2-6A-4

Abstract

This paper contributes to the literatures about Chinese commercial banks technical efficiency. In order to eliminate the deviation of efficiency scores caused by an undesirable output that is represented by banks’ non-performing loans, the estimation is based on an enhanced parametric hyperbolic distance function which considers not only desirable outputs but also undesirable outputs. Furthermore, we extend the model to divide the factors that affecting technical efficiency into direct factors and indirect factors and exclude the influence of the latter when analyzing the determiners of banks technical efficiency. The validity of this model is examined by a panel of bank data from 2004-2010.

Keywords:
Parametric distance functions Chinese bank efficiency undesirable outputs

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