IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v9y2017i12p2163-d120110.html
   My bibliography  Save this article

The Relationship between the Efficiency, Service Quality and Customer Satisfaction for State-Owned Commercial Banks in China

Author

Listed:
  • Meehyang Chang

    (Department of Hospitality and Tourism Management, Sejong University, Seoul 05006, Korea)

  • Han-Byeol Jang

    (School of Business, Hanyang University, Seoul 04763, Korea)

  • Yi-Mei Li

    (School of Business, Hanyang University, Seoul 04763, Korea)

  • Daecheol Kim

    (School of Business, Hanyang University, Seoul 04763, Korea)

Abstract

In 2006, China fully opened up its financial markets. This means that the banking industry is facing a more severe competitive environment, which requires not only the operational efficiency of the bank but also customer satisfaction for the quality of service. As the reform and opening up policy started from the eastern costal areas in China, there are differences in economic development levels by the region, and so are the levels of financial development. Therefore, it is necessary to study the effect of regional differences on bank efficiency. Prior studies also showed a lot of limitations about using data envelopment analysis, in that the efficiencies of the bank are only measured without consideration of other managerial aspects of the service and customer satisfaction. Thus, this study aims to analyze the efficiencies of twenty state-owned commercial banks in five provinces of China. The relationships between bank efficiency, service quality, and customer satisfaction are analyzed. The data used for the analysis was obtained from the 2015 Chinese Banking Statistics. As a result, the average technical efficiency of twenty state-owned banks is as high as 81.9%. It is also found that the bank’s service quality has a positive impact on efficiency and customer satisfaction. In the case of banks that are located in areas with high economic levels, customer satisfaction is lower than that of banks in lower regions. This is because customers in high economic level regions have higher expectations for service quality and it leads to lower customer satisfaction.

Suggested Citation

  • Meehyang Chang & Han-Byeol Jang & Yi-Mei Li & Daecheol Kim, 2017. "The Relationship between the Efficiency, Service Quality and Customer Satisfaction for State-Owned Commercial Banks in China," Sustainability, MDPI, vol. 9(12), pages 1-15, November.
    • Handle: RePEc:gam:jsusta:v:9:y:2017:i:12:p:2163-:d:120110
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/9/12/2163/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/9/12/2163/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Thoraneenitiyan, Nakhun & Avkiran, Necmi K., 2009. "Measuring the impact of restructuring and country-specific factors on the efficiency of post-crisis East Asian banking systems: Integrating DEA with SFA," Socio-Economic Planning Sciences, Elsevier, vol. 43(4), pages 240-252, December.
    2. Paradi, Joseph C. & Zhu, Haiyan, 2013. "A survey on bank branch efficiency and performance research with data envelopment analysis," Omega, Elsevier, vol. 41(1), pages 61-79.
    3. Sherman, H. David & Gold, Franklin, 1985. "Bank branch operating efficiency : Evaluation with Data Envelopment Analysis," Journal of Banking & Finance, Elsevier, vol. 9(2), pages 297-315, June.
    4. Ariff, Mohamed & Can, Luc, 2008. "Cost and profit efficiency of Chinese banks: A non-parametric analysis," China Economic Review, Elsevier, vol. 19(2), pages 260-273, June.
    5. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    6. Shujie Yao & Zhongwei Han & Genfu Feng, 2008. "Ownership Reform, Foreign Competition, and Efficiency of Chinese Commercial Banks: A Non-Parametric Approach," WIDER Working Paper Series RP2008-38, World Institute for Development Economic Research (UNU-WIDER).
    7. Laurent Weill, 2004. "Measuring Cost Efficiency in European Banking: A Comparison of Frontier Techniques," Journal of Productivity Analysis, Springer, vol. 21(2), pages 133-152, March.
    8. Chen, Xiaogang & Skully, Michael & Brown, Kym, 2005. "Banking efficiency in China: Application of DEA to pre- and post-deregulation eras: 1993-2000," China Economic Review, Elsevier, vol. 16(3), pages 229-245.
    9. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    10. Shujie Yao & Zhongwei Han & Genfu Feng, 2008. "Ownership Reform, Foreign Competition and Efficiency of Chinese Commercial Banks: A Non‐parametric Approach," The World Economy, Wiley Blackwell, vol. 31(10), pages 1310-1326, October.
    11. A. Camanho & R. Dyson, 2006. "Data envelopment analysis and Malmquist indices for measuring group performance," Journal of Productivity Analysis, Springer, vol. 26(1), pages 35-49, August.
    12. Soteriou, Andreas C. & Zenios, Stavros A., 1999. "Using data envelopment analysis for costing bank products," European Journal of Operational Research, Elsevier, vol. 114(2), pages 234-248, April.
    13. Tone, Kaoru, 2001. "A slacks-based measure of efficiency in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 130(3), pages 498-509, May.
    14. Wang, Ke & Huang, Wei & Wu, Jie & Liu, Ying-Nan, 2014. "Efficiency measures of the Chinese commercial banking system using an additive two-stage DEA," Omega, Elsevier, vol. 44(C), pages 5-20.
    15. Fethi, Meryem Duygun & Pasiouras, Fotios, 2010. "Assessing bank efficiency and performance with operational research and artificial intelligence techniques: A survey," European Journal of Operational Research, Elsevier, vol. 204(2), pages 189-198, July.
    16. Durusu-Ciftci, Dilek & Ispir, M. Serdar & Yetkiner, Hakan, 2017. "Financial development and economic growth: Some theory and more evidence," Journal of Policy Modeling, Elsevier, vol. 39(2), pages 290-306.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yun-Gi Hwang & Soohyun Park & Daecheol Kim, 2018. "Efficiency Analysis of Official Development Assistance Provided by Korea," Sustainability, MDPI, vol. 10(8), pages 1-13, August.
    2. Eduard Cristobal-Fransi & Francisco Hernández-Soriano & Berta Ferrer-Rosell & Natalia Daries, 2019. "Exploring Service Quality among Online Sharing Economy Platforms from an Online Media Perspective," Sustainability, MDPI, vol. 11(13), pages 1-18, July.
    3. Ricardo Costa-Climent & Carla Martínez-Climent, 2018. "Sustainable profitability of ethical and conventional banking," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 12(4), December.
    4. Ha Thu Nguyen & Hoang Nguyen & Nhan Duc Nguyen & Anh Chi Phan, 2018. "Determinants of Customer Satisfaction and Loyalty in Vietnamese Life-Insurance Setting," Sustainability, MDPI, vol. 10(4), pages 1-16, April.
    5. Zhang, Ailian & Wang, Shuyao & Liu, Bai & Fu, Jingyuan, 2020. "The double-edged sword effect of diversified operation on pre- and post-loan risk in the government-led Chinese commercial banks," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    6. Naveed Ahmad & Miklas Scholz & Zia Ullah & Muhammad Zulqarnain Arshad & Raja Irfan Sabir & Waris Ali Khan, 2021. "The Nexus of CSR and Co-Creation: A Roadmap towards Consumer Loyalty," Sustainability, MDPI, vol. 13(2), pages 1-15, January.
    7. Tomasz Jedynak & Krzysztof Wąsowicz, 2021. "The Relationship between Efficiency and Quality of Municipally Owned Corporations: Evidence from Local Public Transport and Waste Management in Poland," Sustainability, MDPI, vol. 13(17), pages 1-30, August.
    8. María del Carmen Valls Martínez & Salvador Cruz Rambaud & Isabel María Parra Oller, 2020. "Sustainable and conventional banking in Europe," PLOS ONE, Public Library of Science, vol. 15(2), pages 1-23, February.
    9. Salah A. Alabduljader, 2018. "The Influence of Service Quality Dimensions on Organizational Excellence (Perspective of Employees within Kuwaiti Commercial Banks)," International Business Research, Canadian Center of Science and Education, vol. 11(10), pages 149-164, October.
    10. Mohammad Farhan Khan & Farnaz Haider & Ahmed Al-Hmouz & Mohammad Mursaleen, 2021. "Development of an Intelligent Decision Support System for Attaining Sustainable Growth within a Life Insurance Company," Mathematics, MDPI, vol. 9(12), pages 1-22, June.
    11. Nan Zhu & Wasi Ul Hassan Shah & Muhammad Abdul Kamal & Rizwana Yasmeen, 2021. "Efficiency and productivity analysis of Pakistan's banking industry: A DEA approach," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 6362-6374, October.
    12. Maimouna Diouf & Choonjong Kwak, 2018. "Fuzzy AHP, DEA, and Managerial Analysis for Supplier Selection and Development; From the Perspective of Open Innovation," Sustainability, MDPI, vol. 10(10), pages 1-17, October.
    13. Francisco Climent, 2018. "Ethical Versus Conventional Banking: A Case Study," Sustainability, MDPI, vol. 10(7), pages 1-13, June.
    14. JinHyo Joseph Yun & Kwangho Jung & Tan Yigitcanlar, 2018. "Open Innovation of James Watt and Steve Jobs: Insights for Sustainability of Economic Growth," Sustainability, MDPI, vol. 10(5), pages 1-16, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zha, Yong & Liang, Nannan & Wu, Maoguo & Bian, Yiwen, 2016. "Efficiency evaluation of banks in China: A dynamic two-stage slacks-based measure approach," Omega, Elsevier, vol. 60(C), pages 60-72.
    2. Mai, Nhat Chi, 2015. "Efficiency of the banking system in Vietnam under financial liberalization," OSF Preprints qsf6d, Center for Open Science.
    3. Dan Luo & Shujie Yao & Jian Chen & Jianling Wang, 2011. "World Financial Crisis and Efficiency of Chinese Commercial Banks," The World Economy, Wiley Blackwell, vol. 34, pages 805-825, May.
    4. Fethi, Meryem Duygun & Pasiouras, Fotios, 2010. "Assessing bank efficiency and performance with operational research and artificial intelligence techniques: A survey," European Journal of Operational Research, Elsevier, vol. 204(2), pages 189-198, July.
    5. Md. Jahir Uddin Palas & Fernando Moreira, 2022. "The impact of government assistance on banks' efficiency," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 1731-1748, April.
    6. Paul W. Wilson & Shirong Zhao, 2023. "Investigating the performance of Chinese banks over 2007–2014," Annals of Operations Research, Springer, vol. 321(1), pages 663-692, February.
    7. Mohamed Dia & Amirmohsen Golmohammadi & Pawoumodom M. Takouda, 2020. "Relative Efficiency of Canadian Banks: A Three-Stage Network Bootstrap DEA," JRFM, MDPI, vol. 13(4), pages 1-25, April.
    8. Xiaohong Liu & Jiasen Sun & Feng Yang & Jie Wu, 2020. "How ownership structure affects bank deposits and loan efficiencies: an empirical analysis of Chinese commercial banks," Annals of Operations Research, Springer, vol. 290(1), pages 983-1008, July.
    9. Suvash Khanal & Bharat P. Bhatta, 2017. "Evaluating Efficiency of Personnel in Nepalese Commercial Banks," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 23(4), pages 379-394, November.
    10. Li, Yang, 2020. "Analyzing efficiencies of city commercial banks in China: An application of the bootstrapped DEA approach," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    11. Wang, Ke & Huang, Wei & Wu, Jie & Liu, Ying-Nan, 2014. "Efficiency measures of the Chinese commercial banking system using an additive two-stage DEA," Omega, Elsevier, vol. 44(C), pages 5-20.
    12. Barros, C.P. & Emrouznejad, Ali, 2016. "Assessing productive efficiency of banks using integrated Fuzzy-DEA and bootstrapping: A case of Mozambican banksAuthor-Name: Wanke, Peter," European Journal of Operational Research, Elsevier, vol. 249(1), pages 378-389.
    13. Asmild, Mette & Matthews, Kent, 2012. "Multi-directional efficiency analysis of efficiency patterns in Chinese banks 1997–2008," European Journal of Operational Research, Elsevier, vol. 219(2), pages 434-441.
    14. Chen, Zhongfei & Matousek, Roman & Wanke, Peter, 2018. "Chinese bank efficiency during the global financial crisis: A combined approach using satisficing DEA and Support Vector Machines☆," The North American Journal of Economics and Finance, Elsevier, vol. 43(C), pages 71-86.
    15. LaPlante, A.E. & Paradi, J.C., 2015. "Evaluation of bank branch growth potential using data envelopment analysis," Omega, Elsevier, vol. 52(C), pages 33-41.
    16. Vaneet Bhatia & Sankarshan Basu & Subrata Kumar Mitra & Pradyumna Dash, 2018. "A review of bank efficiency and productivity," OPSEARCH, Springer;Operational Research Society of India, vol. 55(3), pages 557-600, November.
    17. Huang, Tai-Hsin & Lin, Chung-I & Chen, Kuan-Chen, 2017. "Evaluating efficiencies of Chinese commercial banks in the context of stochastic multistage technologies," Pacific-Basin Finance Journal, Elsevier, vol. 41(C), pages 93-110.
    18. E. Nur Ozkan Gunay, 2012. "Risk Incorporation and Efficiency in Emerging Market Banks During the Global Crisis: Evidence from Turkey, 2002-2009," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(S5), pages 91-102, November.
    19. Zhu, Ning & Hougaard, Jens Leth & Yu, Zhiqian & Wang, Bing, 2020. "Ranking Chinese commercial banks based on their expected impact on structural efficiency," Omega, Elsevier, vol. 94(C).
    20. Hall, Maximilian J.B. & Kenjegalieva, Karligash A. & Simper, Richard, 2012. "Environmental factors affecting Hong Kong banking: A post-Asian financial crisis efficiency analysis," Global Finance Journal, Elsevier, vol. 23(3), pages 184-201.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:9:y:2017:i:12:p:2163-:d:120110. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.