Banking Efficiency Analysis for Two Special Years during Recent Financial Crisis

Abstract

This paper covered almost thirty thousand groups of commercial banks’ quarterly data in 2007 and 2011 to analyze the influence of 2008 financial crisis on banking performance, and investigate if there is any difference of financial crisis effects on banking efficiency between the agricultural banks and non-agricultural banks. This paper focuses on the influence on the early 21st century’s Great Recession while paying attention to risk factor effect in banking performance analysis. Being cost model the base of the paper, manipulation occurs in both Translog and Cobb-Douglas methods finding banking performance statistics to make a conclusion of the financial crisis influence and risk factor effect on banking operation and development. From the analysis results, banking operation is less efficient in 2007 compared with banking operation in 2011, and banks’ risk preference is changed by financial crisis.