Potential structural efficiency of Chinese commercial banks

Given that structural efficiency serves as a significant instrument, this paper applies a novel approach to measure structural efficiency levels within Chinese banks from the perspective of potential improvement. To further investigate the patterns of structural efficiency, the overall structural efficiency is disaggregated into a series of variable-specific structural efficiencies. It reveals that fixed assets and non-interest incomes constitute the primary sources of structural inefficiency during the study period. Furthermore, the structural efficiencies of small-medium commercial banks surpass those of large state-owned commercial banks, although the efficiency gap between the two types of banks has narrowed. Based on the variable-specific structural efficiencies, this paper further explores the structural efficiency patterns within the Chinese banking sector.