Measuring the productivity of urban commercial banks in China

This paper contributes to the productivity analysis literature by measuring the productivity of 76 urban commercial banks operating in China's 27 regions from 2013 to 2018. A spatial total factor productivity index is constructed using a spatial autoregressive production function. The index is...

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Bibliographic Details
Published in:International review of economics & finance 2024-06, Vol.93, p.477-489
Main Authors: Zhao, Bingquan, Tian, Yuan, Kenjegalieva, Karligash, Wood, Justine
Format: Article
Language:English
Subjects:
Banking productivity
Regional banking
Spatial analysis
Urban commercial banks
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Summary:This paper contributes to the productivity analysis literature by measuring the productivity of 76 urban commercial banks operating in China's 27 regions from 2013 to 2018. A spatial total factor productivity index is constructed using a spatial autoregressive production function. The index is decomposed into the efficiency change and the returns to scale change, and it identifies both spatial direct (feedback) and spatial indirect (spillovers) components. The result confirms positive spatial dependence in the production of urban commercial banks. Additionally, productivity of China's urban commercial banks increases, which is mainly contributed to by the returns to scale change. •A spatial total factor productivity index is constructed to measure bank productivity.•The index is decomposed into the efficiency change and the returns to scale change.•Returns to scale change helps improve China's urban commercial bank productivity.•China's urban commercial banks experience little efficiency change.•Positive spatial dependence of banks' production is observed.
ISSN:1059-0560
DOI:10.1016/j.iref.2024.05.029