Abstract: This paper applies the directional distance function and the super-efficiency data envelopment analysis to measure the efficiency of China’s 11 listed commercial banks under the constraint of non-performing loans, and makes a comparative analysis with the bank efficiency without considering non-performing loans. The results show that the great asset size of large state-owned commercial banks do not lead to higher earnings and better performance, the efficiency value is falling behind that of joint-stock commercial banks. Influenced by the financial crisis, the efficiency of China’s listed commercial banks presents a changing trend of going up first and then down. The bank efficiency without considering non-performing loans is lower than that under the constraints of non-performing loans, so it is necessary to consider the non-performing loans when measuring bank efficiency.

Key words: non-performing loan; directional distance function; super-efficiency DEA; bank efficiency