China’s commercial banks have developed at a very rapid speed in recent decades.
However, with global economic development slowing down, the impact of gross
domestic product growth as an exogenous factor cannot be ignored. Most existing
studies only consider the internal factors of banks, and neglect their external economic
factors. This study thus adopts an undesirable dynamic slacks-based measure under
an exogenous model in combination with the Kernel density curve to explore the
efficiency of state-owned commercial banks (SOCBs), joint-stock commercial banks
(JSCBs), and urban commercial banks (UCBs) in China from 2012 to 2018. The results
show that SOCBs have the highest overall efficiency, followed by JSCBs, then UCBs. The
efficiencies of SOCBs, JSCBs, and UCBs in the financing stage are greater than those in
the investment stage, indicating that the latter stage brings down overall efficiency.
Thus, all commercial banks need to focus on the efficiency of non-performing loans
and return on capital. Finally, SOCBs need to strengthen internal controls, reduce
non-performing loans and improve return on capital. JSCBs should actively expand its
business while controlling costs, and UCBs should optimize its management.
Keywords: Commercial banks, GDP growth, UDSBM, Kernel density curve

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