Title: Non-traditional activities and bank efficiency: empirical evidence from the Chinese banking sector during the post-reform period

Authors: Fadzlan Sufian, Muzafar Shah Habibullah

Addresses: Khazanah Research and Investment Strategy, Khazanah Nasional Berhad, Level 35, Tower 2, Petronas Twin Towers, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia. ' Faculty of Economics and Management, E 109, Department of Economics, Universiti Putra Malaysia, 43400 Serdang Selangor, Malaysia

Abstract: This paper examines the impact of non-traditional activities on the China banking sector|s technical and scale efficiency during the post-reform period 2000-2005. The paper follows the procedures set by Isik and Hassan (2003) by omitting the off-balance sheet items first, before adding it as an additional output variable in the analysis. The empirical findings suggest that the State Owned Commercial Banks| technical efficiency are enhanced attributed to improvement in scale efficiency, the Joint Stock Commercial Banks have exhibited a higher levels of technical efficiency attributed to improvement in pure technical efficiency.

Keywords: bank efficiency; OBS; off-balance sheet items; DEA; data envelopment analysis; multivariate regression analysis; China; non-traditional activities; banking sector; technical efficiency; scale efficiency.

DOI: 10.1504/IJEPEE.2009.027633

International Journal of Economic Policy in Emerging Economies, 2009 Vol.2 No.2, pp.107 - 132

Published online: 04 Aug 2009 *

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