A study of the relationship between employee wage and commercial banks efficiency in China
Journal of Chinese Human Resource Management
ISSN: 2040-8005
Article publication date: 10 October 2016
Abstract
Purpose
Efficiency of a commercial bank affects both its competitiveness and the role it plays in the process of economic development. Although great efforts have been exerted in developing the various aspects of banking efficiency, there seems to be a lack of research on examining the impact of the bank efficiency from the employee wage perspective. The mechanism of how employee wage affects commercial bank efficiency and the relationship between the two were analyzed in this paper. Based on the growing body of research on efficiency in banking, the aim of this paper is to examine if competitiveness of employee wages at any commercial bank has any impact on the bank efficiency score.
Design/methodology/approach
The method used was quantitative analysis, which was based on comparing the evaluated efficiencies of the banks with employee wages published in the bank reports. The empirical data in this paper were based on 16 Chinese listed commercial banks from 2004 to 2012. The per capita wage of commercial banks was selected as the wage indicator, and the efficiency value obtained by the slack-based measure (SBM) model was selected as the efficiency indicator. According to the calculated data, the Tobit regression model was built to analyze the relationship between employee wage and commercial bank efficiency.
Findings
The research results show that employee wage is the key variable that influences the efficiency of Chinese commercial banks, and the inverted U-shaped relationship between employee wage and commercial banks efficiency shows up.
Practical implications
The wage structure data of the composition of basic pay and bonus were not available at the time of conducting the research. Per capita wages were used instead to reflect the employee wage levels of Chinese banks.
Originality/value
This study can provide some help for the banking industry by analyzing the wage levels from the perspective of efficiency and also further enriches the theoretical system of the relationship between employee wage and bank efficiency.
Keywords
Acknowledgements
The work is supported by the National Science Foundation of China (approval no. 71372111).
Citation
Li, J., Ji, J. and Wang, Y. (2016), "A study of the relationship between employee wage and commercial banks efficiency in China", Journal of Chinese Human Resource Management, Vol. 7 No. 2, pp. 147-159. https://doi.org/10.1108/JCHRM-07-2016-0015
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited