ABSTRACT
By considering the World Trade Organization (WTO) accession as an exogenous event, this chapter calculates the annual change of bank efficiency using the observations of 145 Chinese commercial banks in the period from 2000 to 2009. It reviews relevant literature; and provides data sources and discussion on selected input and output specification. The chapter also presents methodology and the algorithm of the bootstrapping technique. It employs the bootstrapping technique conceived by Simar and Wilson in order to provide the statistical inference for the results. According to the restriction levels in the Chinese banking sector, the transition process following China's accession to the WTO may be separated into three stages: before the WTO accession; during the transition process from 2001 to 2006; and after the adaptation phase. In the adapting phase of the WTO accession, the gradual removal of restrictions on foreign banks offers a unique setting for exploring the relationship between foreign bank entry and bank efficiency.
