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The current financial crisis has hit the banking giants of the world really hard. It is striking to note that some of the large Chinese commercial banks have emerged to be the biggest winners as a result of the crisis, thanks to reforms over the past 10 years. The most significant reform before the crisis was ownership diversification, aiming to improve corporate governance and efficiency. Within 1 year from October 2005, three of the four biggest State-Owned Banks (SOBs) were listed on the stock exchanges. This article will study whether this reform has really improved bank efficiency. Adopting the Data Envelopment Analysis (DEA) approach, this article examines whether Initial Public Offering (IPO) is effective in enhancing bank performance. Using data of 14 listed banks during 1999 to 2008, the results show that on average, bank efficiency increased by almost 5% after listing. Despite the fact that Joint Equity Banks (JEBs) still perform better than SOBs, the latter manage to catch up and reduce the efficiency gap with the former during the past few years. This in part explains why the Chinese banking system has been less affected by the current world financial crisis than their western counterparts, leading to an important conclusion that SOB reforms in China over the past 10 years have produced remarkable results.
