This thesis studies the effects of bank-specific and macroeconomic determinants on the performance of banks listed in Mainland China and Hong Kong from 1998 to 2007. Using Tobin’s Q as a key measure of bank performance in addition to the more standard measures such as ROA & ROE, it investigates the determinants of bank performance by incorporating the X-efficiency into a panel data regression model directly. X-efficiency is estimated using the stochastic frontier analysis approach. Generally, t test results indicate that banks in Hong Kong have better bank performance than in Mainland China. The empirical results also show that banks with a higher level of X-efficiency are able to improve their profits through optimizing the input mix to produce a given level of outputs, though it was found to have a weak correlation with profitability in the Chinese banking sector. Capital adequacy and bank size, as measured by higher equity to total asset ratio and logarithm of total assets, lead to higher ROA. Meanwhile, banks with higher loan to total asset ratio tend to have more bad loans, but earn less profit (ROA and Tobin’s Q) only in the Chinese banking sector. With regard to the macroeconomic variables, real GDP growth rate has a significant positive impact on bank performance whether in Hong Kong or Mainland China, whereas the effect of SARS crisis on bank performance is found to be significantly negative, merely in the Chinese banking sector. Further, there was no evidence of a significant performance change in banks following a foreign acquisition in both Hong Kong and Mainland China market.