Evaluation of Taiwan's Bank Performance with Credit Rating

• Main Authors: Ming-Yuan Sun, 孫敏瑗
• Other Authors: Yung-Ho Chiu
• Format: Others
• Language: en_US
• Published: 2005
• Online Access: http://ndltd.ncl.edu.tw/handle/99019858921436315093

碩士 === 東吳大學 === 經濟學系 === 93 === As the Commercial Bank Established Promotion Decree was announced in the early 1980, the number of both domestic and foreign banks has significantly increased and hence led to the keen competition in the banking industry. Banks may increase its market share through various ways, which might influence the credit level of banks. As a result, the operating efficiency and the credit rating are highly paid attention in nowadays. Different from other industries, banking industry is operating based on the credit, which influence the reputation of a bank greatly. In this thesis, we would like to test if the operating efficiency of a bank would be influenced through the consideration of the credit rating. Here we used the Data Envelopment Analysis (DEA) to measure the efficiency of the banks before and after the credit rating is taken into consideration and we also employed the Malmquist Productivity Index to measure the total factor productivity changes from 2001 to 2003. The results are as follows: 1. There is a positive relationship between the efficiency scores and credit rating, thus the credit rating can be a representative to evaluate the performance and quality of a bank. 2. We used the Wilconxon Two-Sample Test of nonparametric statistic to test the influences of credit rating. The empirical result shows that there is difference between the two efficiency scores. Thus the credit rating is proved to have the influence on the efficiency of banks. 3. The efficiency scores improve in both investment grade (above tw BBB-) and speculation grade (under tw BBB-) when credit rating is taken into consideration. The empirical results shows that the efficiency scores of banks with high credit rating are improved relatively more when compared to the banks with lower credit rating. 4. In this research, we also adopted the Malmquist index to observe the productivity and efficiency changes from year to year. We obtained the results that the improvement of efficiency may be influenced greatly both from the pure technical and scale efficiency changes.