This study examines the efficiency of credit allocation among various types of banks in China. Seven different varieties of Chinese banks' performance are examined from 2011 to 2021. We introduce a novel hybrid pseudo‐Malmquist–Grey–TOPSIS model that effectively addresses the need for integrating uncertainty and heuristics in relocation decision‐making. Our analysis reveals that the Joint‐Stock Commercial Bank demonstrates superior performance in terms of credit allocation efficiency. In contrast, rural commercial banks exhibit suboptimal performance when it comes to credit allocation convenience, indicating the importance of prudent credit risk management for this category of banks. It is important to note that the loan allocation performance of each bank category is primarily influenced by the distinct characteristics associated with that specific bank type. However, it is crucial to understand that the success of each bank category's frontier, regardless of its quality, should not be considered a causative determinant of the overall performance of such types of banks.