The Relative Cost Efficiencies of Commercial Banks, Rural Financial Institutions, and Microfinance Institutions in China

Abstract

This study employed data envelopment analysis (DEA) to evaluate the comparative efficiency performance of selected commercial banks, rural financial institutions and microfinance institutions in China. The first pairwise comparison indicated that commercial banks achieved higher level of overall technical efficiency, pure technical efficiency and scale efficiency than rural financial institutions (including RCCs) through the study period (2004-2007). Overall technical inefficiency seems to be more attributed to scale inefficiency rather than pure technical inefficiency for both commercial banks and rural financial institutions. The second pairwise comparison indicated that RCCs and CFPA are the most efficient institutions with efficiency scores of 1 while other MFIs experienced some overall technical inefficiency and scale inefficiency during the study period.microfinance, China, data envelopment analysis, technical inefficiency, scale efficiency, Agricultural Finance,