Are state‐owned banks less efficient? A long‐ vs. short‐run Data Envelopment Analysis of Chinese banks

This paper applies Data Envelopment Analysis (DEA) to determine relative efficiencies of state‐owned and joint stock banks in Chongqing, China, during the period 1996–2000. A distinction is made between long‐ and short‐run efficiencies and inefficiencies to allow for the fact that joint stock banks are relatively new to China have more modern management and access to international finance markets while state‐owned banks generally use government funding. Using Mann‐Whitney rank order statistics produces results in favour of joint stock banks in the short‐run but not in the long‐run. A relatively new way of distinguishing between long‐ and short‐run performances is utilised that avoids the need for identifying lengthy time periods and data associated with long‐run performances.