Acta Geographica Sinica ›› 2015, Vol. 70 ›› Issue (6): 955-964.doi: 10.11821/dlxb201506009

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The influence of geographical distribution of commercial bank loan on the bank profit efficiency in China

Zhimin DAI(), Liyan ZHU()   

  1. College of Economics, Zhejiang University, Hangzhou 310027, China
  • Received:2014-12-19 Revised:2015-04-02 Online:2015-06-20 Published:2015-07-16
  • Supported by:
    Soft Science Foundation of Zhejiang Science and Technology Agency, No.2012C25077

Abstract:

The regional development research on commercial banks has always been the focus of financial geography research. At present, there is still debate on whether the geographical decentralization level of commercial bank loan can positively influence bank performance. This paper uses the loan data of 13 listed commercial banks in China releasing to each province during 2007-2013 to analyze the loan releasing geographical distribution characteristics of large-sized commercial banks and small and medium-sized commercial banks and the geographic variation trend of non-performing loans. On such basis, it uses stochastic frontier analysis (SFA) and the basic model of Battese and Collie (1995) to build the trans-log profit function model to conduct empirical analysis of the influence of geographical decentralization level of commercial bank loan on the efficiency of bank profits. Research results show that: (1) Increasing the geographical decentralization level of loan can boost the revenue and profit efficiency for commercial banks in the process of banking operation; (2) Large-sized commercial banks, due to the effect of national policies, cover broader loan releasing areas, and the loan releasing proportion in the central and western regions is significantly higher than that of the small and medium-sized commercial banks, and the average profit efficiency has always been higher than that of the small and medium-sized commercial banks. However, in recent years, with the gradually increasing geographical decentralization level of small and medium-sized commercial banks loan, the gap of profit efficiency between the two has been narrowed; (3) At present, the loan business of some small and medium-sized commercial banks in China still belongs to the relationship loan, and raising the geographical decentralization level of loan will lower their profit efficiency. Therefore, the diversified business operation should be carefully handled and cannot blindly follow it.

Key words: geography of finance, commercial banks, loan, geographic distribution, efficiency, China