The US credit crunch generated substantial turmoil in the global financial markets and directly caused the collapse of several world banking giants. Nonetheless, Chinese commercial banks, decoupled from the rest of the world, achieved remarkable results because of their risk-averse nature and banking reform during the past 10 years. To improve corporate governance and efficiency, the latest reform was focused on ownership transformation via foreign participation and stock listing. Employing data of 14 listed Chinese banks during the period 1999–2008, this paper tests whether IPO was an effective way to enhance banks’ efficiency using two frontier approaches, data envelopment analysis and SFA. The results confirm our hypothesis and suggest that restructuring banks into shareholding companies improves both technical efficiency and scale economies. This conclusion is further confirmed by the technical inefficiency effects model which found that efficiency rating of listed banks was about 5 per cent higher than their prior IPO level. Facing tougher economic condition and increased competition, banks not only need to broaden income sources, cut expenditures, but more importantly, to strengthen their risk management to become more resistant to a volatile business environment.