|dc.description.abstract||This study uses 34 branches of case bank as the study object, this study aims to evaluate its efficiency changes, and discuss the impact of interest rate spread reduction on the efficiency of bank’s branches in the low rate environment. By using the dataset of 34 branches in case bank for the period from 2018 to 2020, we study following three stages
1. Stage One: Apply the data envelopment analysis for measuring the operating performance and efficiency of bank branches. From empirical results, above 70% of the branches are in a state of increasing returns of scale, which indicates that under current output level, bank branches did not reach economic benefits. In order to enhance overall operating efficiency and achieve optimal returns of scale, the results suggest that most of the branches should expand its scale of operation, meanwhile, increase the amount of bank services.
2. Stage Two: focus on examining factors that affect operating efficiency with the Tobit regression model. According to the case study, variable “deposit and loan spreads” has positive significant influence on technical efficiency. The bank’s branches should be able to adjust their operating strategy and product differentiation, in order to improve the performance in the low interest rate and spread reduction era.
3. Stage Three: uses banks reorganized according to credit cooperations as study object, also, adopts same method as case bank in phase one and two. Based on the empirical results, variable “deposit and loan ratio” has positive significant influence on technical efficiency. So as to react to the impact of low interest rate and spread reduction, adjusting capital structure and strengthen non-spread-income business should be an effective strategy.
According to previous discussion, our goal is to slow down the impact of reduction of interest rate margin and enhance bank branches’ efficiency and earning power. For example, case bank can diversify its management model, adjust its structure of earning power, optimize and integrate user experience, and develop new business services based on present level and at the same time, towards expanding business scale.||en_US|