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...

Full description

Bibliographic Details
Main Author:	Sufian, Fadzlan
Format:	Article
Language:	English
Published:	Inderscience Publishers 2010
Subjects:	HG1501 Banking
Online Access:	http://irep.iium.edu.my/5259/ http://irep.iium.edu.my/5259/ http://irep.iium.edu.my/5259/ http://irep.iium.edu.my/5259/1/IJBPM120103_SUFIAN.pdf

id	iium-5259
recordtype	eprints
spelling	iium-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
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
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/ http://irep.iium.edu.my/5259/ http://irep.iium.edu.my/5259/ http://irep.iium.edu.my/5259/1/IJBPM120103_SUFIAN.pdf
first_indexed	2023-09-18T20:13:46Z
last_indexed	2023-09-18T20:13:46Z
_version_	1777407650796929024

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

Similar Items