x efficiency in australian banking an empirical investigation this paper empirically investigates the x eaciency technical and allocative in australian banks a non parametric method of data envelopment analysis dea has been used to arrive at the eaciency scores banks in this sample were found to have low levels of overall eaciency compared with the banks in the european countries and in the us the results indicate that as a source of overall ineaciency the technical component was more important than the allocative component thus the ineaciency in australian banks can be attributed to wasting of inputs technical ineaciency rather than choosing the incorrect input combinations allocative ineaciency domestic banks were found to be more eacient than foreign owned banks the study has important implications such as guiding the government policy regarding deregulation and mergers since the study pinpoints the sources of ineaciency it would also help banks with strategic planning 2001 elsevier science b v all rights reserved

efficiency analysis in banking firms an international comparison abstract the intensive process of financial european integration together with the profound transformation and deregulation that has taken place in the spanish banking system justifies the evaluation of its efficiency in comparison with that of other banking systems in this context the aim of this study is to analyze the productivity efficiency and differences in technology of several banking systems using a non parametric approach together with the malmquist index we compare the efficiency productivity and differences in technology of different european and us banking systems for the year 1992

the technical efficiency of large bank production abstract significant difficulties in commercial banking in the late 1980s raise questions about bank performance and efficiency with the use of data envelopment analysis dea we consider the relative technical efficiency of 201 large banks from 1984 to 1990 bank technical inefficiency averages just over 5 percent much lower than found in existing estimates larger and more profitable banks have higher levels of technical efficiency at the same time however larger banks are more likely to operate under decreasing returns to scale

a model of the financial firm with imperfect asset and deposit elasticities abstract the paper develops an intertemporal model to estimate the production technology of financial firms such as banks price taking is testable in each separate market for assets and liabilities and competitive price taking is a nested special case such tests are applied both to outputs and inputs empirical results for a sample of banks in new york and new jersey indicate that price taking applies only in markets for labor and time deposits in markets for loans demand deposits cash and materials the price taking hypothesis is not accepted

economic cost scale efficiency and competitive viability in banking this paper addresses the issue of the competitive viability of banks of different scales and scopes of operation and the implications that this may have for the evolving structure of the banking and financial services industry unlike previous papers this paper is the first to include both production and opportunity costs in an empirical evaluation of bank efficiency no consistent evidence is reported to suggest that banking organizations can achieve further gains in either production or economic efficiency by expanding beyond 2 billion dollars of total assets thus it is likely that smaller less diversified banking organizations will remain competitively viable copyright 1996 by ohio state university press

productive efficiency performance of minority and nonminority owned banks a nonparametric approach abstract this study examines the efficiency performance of the minority owned banks mobs as multiproduct firms relative to that of the nonminority banks nmobs using a highly flexible nonparametric approach since mobs and nmobs employ distinct technologies the efficiency indices for the two groups are derived relative to their respective group specific frontiers and are contrasted to shed light on the ownership efficiency relationship the mob sample is then disaggregated and the intra group efficiency differentials are investigated the findings support the hypothesis that abstracting the regional regulatory size and maturity characteristics of banks efficiency differentials between mobs and nmobs are statistically insignificant

endogenous thresholds and tests for asymmetry in us prime rate movements abstract this paper tests the hypothesis that movements in the prime rate are dependent upon the interest rate regime we find that the responsiveness of prime to changes in the federal funds rate is relatively symmetric but that the speed of adjustment of prime is faster when there is a substantial deviation from the equilibrium relationship linking these rates these two results would confirm that lending markets are competitive in the us and that monetary policy actions are readily transmitted to lending rates

can mergers ensure the survival of credit unions in the third millennium abstract the survival of small financial institutions in the third millennium depends on their competitiveness against large bank rivals accordingly credit unions in australia and the united states have attempted to increase efficiency through mergers our paper uses the data envelopment analysis methodology to evaluate the post merger gains in technical and scale efficiency achieved by 31 australian credit union mergers in 1993 1994 and 1994 1995 relative to non merging credit unions when compared with the only us study of credit union mergers journal of banking finance 23 1999 367 386 our findings suggests that mergers are not associated with improvements in efficiency superior to those achieved by internal growth

cost efficiency and financial and geographical characteristics of banking sectors in the mena countries abstractwe utilize the translog stochastic frontier model to estimate the cost efficiency levels for conventional and islamic cooperation council gcc and non gcc banks in the middle east and north african mena countries the estimated cost efficiency averages around 77 for those mena banks but with slight changes in this score for the individual countries the results also show that the banks in the gcc countries are the most efficient in the region and the efficiency scores for the conventional and islamic banks are similar finally the recent financial crisis seems to have a slight impact on the observed efficiency scores of those banks

efficiency and risk in taiwan banking sbm super dea estimation in this study we adopt the two data envelopment analysis dea methods including banker charnes cooper bcc and slacks based measure sbm super efficiency to investigate whether a bank s technical efficiency index s results incorporating account risk and not incorporating account risk differ significantly the information is obtained from 43 taiwanese banks for the period 1998 to 2002 we also employ the nonradial and slacks based malmquist total factor productivity tfp index to measure the impact of productivity change on the panel data our empirical results from the dea approach are summarized as follows 1 loan quality factors have an impact on a bank s efficiency in general the bank with a higher degree of problem loans drops down its efficiency by incorporating account risk however the bank with a lower degree of problem loans increases its efficiency by incorporating account risk 2 super efficiency provides a good framework for ranking efficient units 3 based on the nonradial an

the dominance of inefficiencies over scale and product mix economies in banking abstract this study measures and analyzes inefficiencies for all u s banks in 1984 inefficiencies are measured relative to a thick frontier cost function and are found to dominate measured scale and product mix economies most inefficiencies are operational in nature involving the overuse of physical inputs rather than financial involving overpayment of interest also technical inefficiencies proportionate overuse of all inputs dominate allocative inefficiencies improper mix of inputs these results suggest that competitive pressures in banking from deregulation will be focused primarily on banks that do not control costs rather than on those of a particular size or product mix

scale and scope economies in the multi product banking firm abstract the multi product nature of the banking firm is examined utilizing the translog cost function this analysis indicates that contrary to conventional wisdom natural monopoly scale economies and product specific decreasing costs are not robust characterizations of the banking industry there is however evidence that the cost function is characterized by economies of scope the implications of these results are discussed and extensions of this approach suggested

scale economies in banking a restructuring and reassessment the issue of scale economies in banking has a rich history most earlier studies report modest operating cost scale economies for small institutions those with less than about 50 million of deposits in 1968 dollars but are unclear where these economies might end if at all unfortunately these studies are limited in four important respects first those that were well specified did not measure the total cost of banking operations but concentrated on estimating scale economies for individual banking functions e g demand deposits separately from commercial loans second an average cost curve that could take a u shape over the full range of banks was not fitted either because larger banks were not included or because of the functional form used cobb douglas consequently the optimum or minimum cost size of a bank or office could not be determined third the variables measuring the costs of branching were misspecified fourth the branch

productivity growth in large us commercial banks the initial post deregulation experience abstract we explore productivity growth for a group of 201 large us commercial banks over the initial post deregulation period from 1984 to 1990 using data envelopment analysis dea we measure productivity growth using malmquist productivity indexes and isolate the contributions of technical change technical efficiency change and scale change to productivity growth we find overall productivity growth at the rate of about 4 5 per year on average but productivity declined by 7 61 between 1984 and 1985 and by 0 33 between 1988 and 1989 our second stage panel regressions reveal that larger asset size and specialization of product mix associate with higher productivity growth while higher equity to assets associates with lower productivity growth

trends in relationship lending and factors affecting relationship lending efficiency abstract this paper investigates the efficiency of relationship managers at the canadian imperial bank of commerce cibc one of canada s largest banks data envelopment analysis dea efficiency scores are analyzed using regression the results demonstrate that managers are less efficient when facing larger numbers of loans or smaller loans m berlin and l j mester on the profitability and cost of relationship lending working paper no 97 43 the wharton school university of pennsylvania 1997 show that credit smoothing is generally suboptimal a more complete explanation is obtained by taking a micro level focus other results indicate that banks may improve profitability by reserving relationship lending for loans of larger size tests of relationships between efficiency and nonperforming loans and of the skimping hypothesis are conducted

resolving the deposit dilemma a new dea bank efficiency model abstract one of the weaknesses of current bank efficiency models is a disagreement as to the role of deposits in the bank production process some models view deposits as an input while others view them as an output such disparity of approaches results in inconsistent efficiency estimates in this study we propose an alternative data envelopment analysis dea bank efficiency model that treats deposits as an intermediate product thus emphasizing the dual role of deposits in the bank production process consequently the effect of the amount of deposits on bank efficiency depends on the efficiency at both stages of the bank production process the main advantage of our model is that it does not require a researcher to make a judgment call as to whether having more production approach or less intermediation approach deposits is better for bank efficiency our unified framework has the potential to produce more consistent efficiency estimates

output and productivity in banking concepts in banking output and the empirical literature on bank productivity which employs output concepts are critically surveyed for output the national accounts production and intermediation approaches are compared as regards productivity both partial and total factor productivity measures and the dea and parametric approaches to the latter are assessed among the most striking results is the prevalence of technical inefficiency in banking but it is also suggested that measurement techniques have often outpaced the theory of what is to be measured notably in fields such as joint production risk and competition alternative approaches to address these issues are suggested

measuring the efficiency of multiunit banking an activity analysis approach abstract we present an activity analysis model of multiunit banking multiunit banks include banks with several branches multibank holding companies with several affiliate banks and banks that result from the merger or consolidation of two or more banks in addition various efficiency measures are presented in an attempt to gauge the potential gains from multiunit banking

technical and scale efficiency of japanese commerical banks a non parametric approach not only are the nature and extent and scale efficiency of japanese commerical banks studied but a relationship between both organizational status and size efficiency is also announced the efficiency measures are computed from a 1990 sample of cross sectional data for the estimation we employ the non parametric approach which has recently been gaining popularity for the studies of banking efficiency outside japan

the technical efficiency of us banks abstract the paper uses a non parametric frontier approach to measure the technical efficiency of a sample of u s banks the results indicate that these banks could have produced the same level of output with only 70 of the inputs actually used in addition most of this inefficiency is due to pure technical inefficiency wasting inputs rather than scale inefficiency operating at non constant returns to scale finally regression analysis indicates that the technical efficiency of the banks is positively related to size negatively related to product diversity and not at all related to the extent to which branch banking is allowed

scale economies cost efficiencies and technological change in federal reserve payments processing the payments system the means of conducting transactions in an economy hume s oil has undergone tremendous change over the centuries commodity money was replaced by fiat usually paper money reducing transportation and storage costs the invention of checks to supplement fiat money further reduced transportation and storage costs lessened the problem of theft and provided a record of transactions most recently the advent of electronic payment instructions has greatly reduced the time and handling costs associated with checks between the great evolutionary leaps forward that gave rise to new forms of payment instructions smaller degrees of gradual evolution occurred within each payment mechanism refining and improving them and reducing the costs associated with their use

the public accounting industry production function abstract a translog function is specified to represent the relation between revenue and human resource inputs in public accounting firms estimation of the model using a balanced panel of annual data for 64 large cpa firms for the period 1995 1999 indicates that increasing returns to scale prevail in the public accounting industry justifying recent merger and acquisition activities among accounting firms average marginal revenue product of partners increased monotonically from 1995 to 1998 decreased slightly in 1999 and was about nine times that of other professionals during 1995 1999 the public accounting industry exhibited continuing improvement in productivity over the 5 years

scale elasticity versus scale efficiency in banking in the early bank cost literature many of the studies found scale elasticities significantly different from unity as a result the authors suggested that changes in industry structure could produce cost savings through increased efficiency recent bank cost studies improved upon previous methodologies by utilizing flexible functional forms accounting for multiproduct production processes estimating scale measures at both the branch and firm level distinguishing between branch and unit bank technologies resulting from regulatory restrictions etc the typical finding from the recent studies is that relatively minor scale economies exist in banking since the scale elasticity measure differs little from a value of unity this reported finding is usually followed by a general statement that banks operate relatively efficiently with respect to the scale of production and that the potential cost gains from exploiting scale advantages via merger or growth activities appear to be relatively minor the implication from the conclusions drawn by the authors of numerous studies is that scale elasticity and scale efficiency are essentially synonymous the derivation of one automatically provides an accurate or approximate value for the other the purpose of this article is to bring attention to a common confusion in the literature between two relatively straightforward concepts scale elasticity and scale efficiency the bank production process is one of the most extensively researched aspects of bank behavior until recently however studies have not typically evaluated scale efficiency instead scale elasticity estimates have been used as a proxy for efficiency and elasticity measures close to 1 0 are taken to imply that scale inefficiency is trivial scale inefficiency is typically assumed to be linearly

organizational form and efficiency the coexistence of stock and mutual property liability insurers this article introduces a new approach cross frontier analysis for estimating the relative efficiency of alternative organizational forms in an industry the technique is illustrated by analyzing a sample of stock and mutual property liability insurers using nonparametric frontier efficiency methods cross frontier analysis measures the relative efficiency of each organizational form by computing the efficiency of each stock mutual firm relative to a reference set consisting of all mutual stock firms we test agency theoretic hypotheses about organizational form including the managerial discretion and expense preference hypotheses the results indicate that stocks and mutuals are operating on separate production and cost frontiers and thus represent distinct technologies consistent with the managerial discretion hypothesis the stock technology dominates the mutual technology for producing stock outputs and the mutual technology dominates the stock technology for producing mutual outputs however consistent with the expense preference hypothesis the stock cost frontier dominates the mutual cost frontier our findings thus suggest a richer interpretation of organizational form than provided by previous researchers

malmquist indices of productivity growth during the deregulation of norwegian banking 1980 89 productivity growth during the deregulation of the norwegian banking industry is studied within the framework of data envelopment analysis which explicitly allows for multiple outputs introducing malmquist indices for productivity growth total growth can be decomposed into frontier growth and change in each bank s distance to the frontier both the total growth index and its components can be consistently chained over time we find productivity regress at the average bank prior to the deregulation but rapid growth when deregulation took place deregulation also led to less dispersion of productivity levels within the industry

the effect of organizational structure on efficiency evidence from the spanish insurance industry this paper provides new information on the effects of organizational structure on efficiency by analyzing spanish stock and mutual insurers over the period 1989 1997 we test the efficient structure hypothesis which predicts that the market will sort organizational forms into market segments where they have comparative advantages and the expense preference hypothesis which predicts that mutuals will be less efficient than stocks technical cost and revenue frontiers are estimated using data envelopment analysis the results indicate that stocks and mutuals are operating on separate production cost and revenue frontiers and thus represent distinct technologies in cost and revenue efficiency stocks of all sizes dominate mutuals in the production of stock output vectors and smaller mutuals dominate stocks in the production of mutual output vectors larger mutuals are neither dominated by nor dominant over stocks in the cost and revenue comparisons thus large mutuals appear to be vulnerable to competition from stock insurers in spain overall the results are consistent with the efficient structure hypothesis but are generally not consistent with the expense preference hypothesis

an examination of cost structure and production performance of commercial banks in singapore abstract this paper uses a parametric approach in the framework of a translog cost function and a non parametric approach in the framework of linear programming to examine production performance and cost structure of a sample of singaporean commercial banks the results of the parametric methodology suggest that the average cost curve of these banks is u shaped and there are economies of scale for small and medium size banks further analysis provides evidence of economies of scope for all banks regardless of their size the non parametric results indicate that the singaporean banks could have reduced cost by 43 had they all been overall efficient the sources of this cost inefficiency seem to be caused equally by allocative and technical inefficiencies

assessing productive efficiency of banks using integrated fuzzy dea and bootstrapping a case of mozambican banks performance analysis has become a vital part of the management practices in the banking industry there are numerous applications using dea models to estimate efficiency in banking and most of them assume that inputs and outputs are known with absolute precision here we propose new fuzzy dea level models to assess underlying uncertainty further bootstrap truncated regressions with fixed factors are used to measure the impact of each model on the efficiency scores and to identify the most relevant contextual variables on efficiency the proposed models have been demonstrated using an application in mozambican banks to handle the underlying uncertainty findings reveal that fuzziness is predominant over randomness in interpreting the results in addition fuzziness can be used by decision makers to identify missing variables to help in interpreting the results price of labor price of capital and market share were found to be the significant factors in measuring bank efficiency managerial implications are addressed

exploring efficiency differences over time in the spanish banking industry abstract over the last 15 years the competitive conditions under which spanish banking firms operate have become much tighter deregulation has affected both banks and savings banks allowing them to expand geographically and to choose less regulation conditioned output mixes this paper analyzes how in these circumstances banking efficiency has been affected considering two specifications of output and analyzing the dynamics of the entire distribution not only mean and standard deviation results differ depending on the output definition but they show that in general efficiency scores exhibit dynamic patterns that only two moments of the distribution hardly capture in particular regardless of the output definition considered efficiency scores were more dispersed in 1985 and more concentrated in 1995 and there were substantial changes in firms efficiency relative positions as measured by transition probability matrices in addition the multi modality of the distributions has almost disappeared at the end of the period

technical scale and allocative efficiencies in u s banking an empirical investigation a nonparametric frontier approach is used to calculate the overall technical pure technical allocative and scale efficiencies for a sample of 322 independent banks the sample was drawn from the federal deposit insurance corporation tapes on the reports of condition and reports of income call reports for the year 1986 the results indicated a low level of overall efficiency the main source of inefficiency was technical in nature rather than allocative separate efficiency frontiers were constructed to test the effect of branching however the distributions of efficiency measures for branching and non branching banks were not found to be different

evidence on incentive effects of subjective performance evaluations the authors investigate the effect of managerial performance evaluation styles on employee work effort using panel data on 4 080 employees in a swiss unit of an international company for the period 1999 2002 they test two hypotheses using paid and unpaid overtime work as effort indicators the company applies two performance based remuneration mechanisms an individual surprise bonus and one in which salary is affected by the extent to which an individual has reached personalized targets the authors hypothesize that effort is higher in departments in which individual performance evaluations are more flexible over time as well as when surprise bonuses are used more frequently both hypotheses are supported and the estimated effects are substantial increases in rating flexibility or bonus payments by one standard deviation above the mean increase average overtime hours by more than 20 the findings are robust and suggest that surprise bonuses and flexible performance evaluations over time provide ef

economies of diversification in the banking industry abstract this paper defines a new measure economies of diversification to examine the cost effect of product line expansion this measure is a special case of expansion path subadditivity and contains economies of scope as a special case a nonparametric frontier technique which isolates the effects of inefficiency and scale is used to measure economies of diversification applied to a set of 468 u s depository institutions operating in 1984 we find slight diseconomies of diversification diseconomies of diversification and inefficiency due to the overutilization of resources are found to be more important determinants of bank costs than is the failure to operate at optimal scale

a parallel production frontiers approach for intertemporal efficiency analysis the case of taiwanese commercial banks abstract a comparison of the efficiency of a production unit at one period with those of other units at another period is challenging because the bases for calculating efficiency are usually different the malmquist productivity index mpi is an effective measure that can overcome this difficulty however the existing measures of this index have various weaknesses with regard to feasibility circularity decomposability and consistency this paper thus develops a model to construct parallel production frontiers for the units at different periods to measure the mpi this model is always feasible the calculated mpi has the property of circularity it can be decomposed into the product of efficiency change and technical change and the results are consistent an application of this model to taiwanese commercial banks for the period 2008 2013 confirms these merits the results also indicate that in general the mpis of these banks increased from 2008 to 2013 and this was attributed to improvements in technology since the efficiencies measured from the parallel model are comparable among different units and different periods they can be used for intertemporal analysis to identify the banks with unsatisfactory performance in different periods

short run cost inefficiency of commercial banks a flexible stochastic frontier approach we adopt the intermediation approach and use a flexible stochastic frontier to examine the cost efficiency of united states commercial banks with total assets in excess of million we find an average overall inefficiency of just under 10 percent a level somewhat lower than found in previous work our analysis of intra industry variation concludes that inefficiency generally rises with bank size further banks that have branching networks either domestic or foreign have higher inefficiency on average but at the same time inefficiency falls as the number of offices in the branch network expands state level data on the ease of serviceing the market competition from savings institutions and the financial sophistication of depositors significantly affect bank inefficiency generally with the expected signs finally our findings suggest that regulatory changes that increase capital requirements may lead to increased bank efficiency in the short run copyright 1994 by ohio state university press

intellectual capital and firm performance evidence from indian banking sector in the aftermath of the 2008 financial crisis the entire indian banking industry was paralysed and their performance was shattered by the unfolding of enormous cases of non performing assets npa

firm efficiency and the regulatory closure of s ls an empirical investigation this paper uses a two step methodology to examine the relationship between firm inefficiency and the regulatory closure of savings and loans s ls in the first step using multiproduct translog stochastic cost frontiers the authors estimate inefficiency scores separately for mutual and stock s ls operating in the southwest in 1988 they use the inefficiency scores in second step logit models to identify determinants of regulatory closure for both mutual and stock s ls the authors find a significant positive relationship between firm inefficiency and regulatory closure they also find a greater probability of closure for s ls in economically depressed states copyright 1993 by mit press

efficiency and credit rating in taiwan banking data envelopment analysis estimation in this article we use the data envelopment analysis to measure the efficiency of banks before and after credit rating is taken into consideration and we also employ the malmquist productivity index to measure the total factor productivity changes from 2001 to 2003 the results are as follows 1 there is a positive relationship between the efficiency scores and credit rating and thus the credit rating can be a representative to evaluate the performance and quality of a bank 2 we use the wilconxon two sample test of nonparametric statistic to test the influences of credit rating the empirical result shows that the credit rating is proven to influence the efficiency of banks 3 the efficiency scores improve in both investment grade above tw bbb and speculation grade under tw bbb when credit rating is taken into consideration the empirical results show that the efficiency scores of banks with a high credit rating improved relatively more when compared to banks with a lower credit rating

mergers and technical efficiency in spanish savings banks a stochastic distance function approach abstract the aim of this paper is to test the temporal variation of technical efficiency of spanish savings banks during the period 1985 1998 furthermore we test whether merged and non merged firms have different levels and temporal patterns of technical efficiency a stochastic output distance function r w shephard theory of cost and production functions princeton university press princeton nj is employed to accommodate multiple output technology the distance function provides the advantage that it does not need information about prices so it can accommodate the multi product nature of the financial sector only using the quantities as data an important point when the assumptions about perfectly competitive markets are unlikely to be met the temporal variation of efficiency is modeled extending the battese and coelli journal of productivity analysis 3 1992 153 169 approach in two ways relaxing the monotonicity of the temporal variation pattern of the efficiency term and allowing for different patterns of efficiency change between merged and non merged firms

evaluating the cost efficiency of the italian banking system what can be learned from the joint application of parametric and non parametric techniques abstract research on bank efficiency has developed in two separate streams econometric studies and data envelopment analysis a linear programming technique these two branches of literature have developed quickly but separately in this paper these two approaches have been tested on a common panel of 270 italian banks and this has suggested the following i econometric and linear programming results do not differ dramatically when based on the same data and conceptual framework ii when differences arise they can be explained by going back to the intrinsic features of the models moreover some findings on italian banks may be of interest also to the international reader i efficiency scores show a high variance ii the banking system is split in two between northern and southern banks iii there is a direct rather than inverse relationship between productive efficiency and asset quality iv the efficiency of italian banks did not increase over the period 1988 1992

x efficiency and technical efficiency efficiency measurement has become a very popular field in applied economics in recent years and with this interest there has been a large intellectual investment in refining the empirical methods available to researchers in the area in this paper we relate these developments to harvey leibenstein s original 1966 insight into the psychological ideas underlying the notion that economic agents may not achieve maximal efficiency in their productive decisions and behaviour of course it is always possible to argue that apparent inefficiency only arises from a failure of the observer to realise what it is that is being maximized however we evade this easy escape route into non falsifiable hypothesizing and instead take at face value the fact that too many empirical studies have come up with substantial measures of inefficiency for us to ignore its importance for normative economics

banking efficiency in the nordic countries abstract evidence of the relative competitiveness of the banking industries in three nordic countries is provided by applying data envelopment analysis of productivity on the national and the pooled data sets the analysis produces a detailed account of how well banks from different countries and different sizes may be prepared to meet the more intense competition of a common european banking market

dea ar profit ratios and sensitivity of 100 large u s banks abstract several important dea ar concepts were applied here to banking for the first time this application includes classification sensitivity uniqueness linked cones lcs and profit ratios notably large bank behavior seems to be explained better by profit ratios than by relative efficiency measures of dea efficiency ar efficiency and lc profit ratios were made for a bank panel of the u s s 100 largest banks in asset size from 1986 to 1991 high levels of inefficiency were found as in previous studies classification of the dea efficiency measures identified the inefficient dmus with some positive primal slacks sensitivity analysis of the dea efficiency measures showed that the extreme efficient classification was generally relatively insensitive to errors in the data the ars eliminated i 44 to 60 of the dea extreme efficient dmus and ii all of the banks with unprofitable actual profit ratios some statistical analyses highlight the superiority of the lc profit ratios relative to the ar efficiency measures

technical progress inefficiency and productivity change in u s banking 1984 1993 studies often find that on average u s commercial banks are quite inefficient and the authors find that banks became more technically inefficient between 1984 and 1993 from a new decomposition of the malmquist productivity index into changes in pure technical and scale efficiency as well as both pure technical changes and changes in scale of technology they find that much of the inefficiency increase can be attributed to the general failure of banks to adopt technological improvements made by a few banks that advanced the efficient frontier small banks experienced especially large decreases in both efficiency and productivity

cost structures in multinational and domestic banking abstract prior research on international banking has proposed many reasons for the multinationalization of u s banks but provided little empirical support for its propositions using a pooled time series data set from 1987 to 1990 this study analyzes the ray and expansion path scale economies and expansion path subadditivity of u s based multinational banks mnbs both at the firm and the plant levels it also measures and analyzes inefficiencies for these banks inefficiencies are measured relative to a thick frontier cost function a similar analysis is conducted for domestic banks dbs for comparison purposes no support is found for the prior belief that similar cost structures exist for mnbs and dbs in general we find that mnbs are able to fully exploit economies of scale and face lesser diseconomies from joint production and lower inefficiencies than dbs

technical scale and allocative efficiencies of turkish banking industry this paper investigates input and output efficiency in the turkish banking industry to understand the impact of size international variables ownership control and governance on profit cost allocative technical pure technical and scale efficiency measures employing a non parametric approach along with a parametric approach we estimate the efficiency of turkish banks over the 1988 1996 period this period allows us to account for the changes in the macro economy and regulatory treatment of the turkish banking industry over time our results suggest that the heterogeneous characteristics of banks have significant impact on their efficiency moreover cost and profit efficiencies of the turkish banks have exacerbated over time results also indicate that the dominant source of inefficiency in turkish banking is due to technical inefficiency rather than allocative inefficiency which is mainly attributed to diseconomies in scale to the extent that they chose an inefficient level of production bank management is responsible for scale inefficient operations however increasing demand for banking services in the nineties fueled by the state s increasing demand for funds to finance chronic budget deficits and high growth policies and the oligopolistic nature of the turkish banking market do not justify scale adjustments our policy suggestions are that the government implement financial reform packages that foster competition in the banking market and that the industry devise incentive schemes to improve managerial efficiency

the impact of financial liberalization on bank efficiency evidence from latin america and asia this article investigates the impact of financial liberalization on bank efficiency using data for a sample of over 4000 bank year observations from ten emerging economies for the period 1991 2000 we use data envelopment analysis dea to calculate bank efficiency at the individual bank level bank efficiency measures are then aggregated at the country level to investigate the relationship between financial liberalization and bank efficiency using a panel least square fixed effects model overall we find strong support for the positive impact of financial liberalization programmes on bank efficiency

trends in efficiency in response to regulatory reforms the case of indian and pakistani commercial banks this paper attempts to estimate trends in the efficiency levels of indian and pakistani commercial banks between 1985 and 2003 a time period which encompasses two phases of significant change to the regulation of the financial sector in both countries our efficiency estimates show that during the initial years of the post reform period a reduction in efficiency is observed for banks in both countries however efficiency levels were found to have increased subsequently suggesting a period of initial adjustment throughout much of the 1990s followed by a subsequent correction in the latter part of the sample period

financial deregulation and total factor productivity change an empirical study of turkish commercial banks abstract in january 1980 a new liberal economic policy was adopted in turkey to promote financial market development and increase the efficiency and productivity of the financial sector by fostering competition among banks as a result of this policy the turkish banking system witnessed a series of legal structural and institutional changes throughout the 1980s to enhance their competitive viability turkish banks responded by streamlining their operations and investing in new technology utilizing a dea type malmquist total factor productivity change index we examine productivity growth efficiency change and technical progress in turkish commercial banks during the deregulation of financial markets in turkey we found that all forms of turkish banks although in different magnitudes have recorded significant productivity gains driven mostly by efficiency increases rather than technical progress efficiency increases however were mostly owing to improved resource management practices rather than improved scales our results also indicate that private banks began to close their performance gap with public banks in the new environment

estimating input specific technical inefficiency the case of the tunisian banking industry abstract this paper presents an econometric model to estimate input specific technical efficiency iste in a panel data framework it extends the few existing models to estimate iste it can be applied to any flexible functional form and technical inefficiency is firm specific and time variant this model is applied to obtain estimates of technical inefficiency specific to factors of production in the tunisian banking industry it is shown that technical efficiency of labor and capital inputs are decreasing over time labor input is more inefficiently used than capital input and banks which are relatively more efficient in using capital input are less efficient in using labor input

technical efficiency and scale efficiency in the italian banking sector a non parametric approach measures of technical and scale efficiencies are derived in the italian banking industries by implementing non parametric data envelopment analysis on a cross section of 174 italian banks taken in 1991 the methodology of the parametric and non parametric approaches to measure efficiency are discussed the existence of both technical and allocative efficiency is established this result is robust to modifications in the specification of inputs and outputs suggested by the intermediation approach and by the asset approach in implementing both the intermediation and the asset approach the traditional specification of inputs is modified to allow an explicit role for financial capital in addition regression analysis is used on a bank specific measure of inefficiency to investigate determinants of banks efficiency efficiency is best explained by productive specialization size and to a lesser extent by location