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Effects Of Financial Capital On Colombian Banking Efficiency

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  • DAIRO ESTRADA

    ()

  • POLDY OSORIO

    ()

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    Abstract

    In this paper we discuss cost and profit efficiency on the Colombian financial market in the period 1989-2003, using stochastic frontier efficiency analysis. During the period, the cost efficient frontier deteriorates, but profit efficient frontier is relatively stable. We found significant difference when we compare the efficiency scores among different types of financial intermediaries. Additionally, our analysis shows that the scores for profit and cost efficiency have different distributions. Also, we found big differences between profit and cost efficiency among the different type of banks. This is evidence in favor of the existence of collusive behavior of some banks, which allows them to capture oligopoly rents.

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    File URL: http://www.banrep.gov.co/docum/ensayos/pdf/espe_047-5.pdf
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    Bibliographic Info

    Article provided by BANCO DE LA REPÚBLICA - ESPE in its journal ENSAYOS SOBRE POLÍTICA ECONÓMICA.

    Volume (Year): (2004)
    Issue (Month): ()
    Pages:

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    Handle: RePEc:col:000107:002433

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    Keywords: frontier; efficiency; cost; profit; financial capital.;

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    References

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    1. George J. Benston & Gerald Hanweck & David B. Humphrey, 1981. "Scale economies in banking: a restructuring and reassessment," Research Papers in Banking and Financial Economics 53, Board of Governors of the Federal Reserve System (U.S.).
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    6. Alejandro BADEL FLOREZ, 2002. "Sistema Bancario Colombiano: ¿Somos eficientes a nivel internacional?," ARCHIVOS DE ECONOMÍA 003500, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
    7. Castro Carlos Alberto, 2001. "Eficiencia-X en el sector bancario colombiano," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.
    8. Rodrigo Suescún M. & Martha Misas, . "Cambio Tecnológico, Ineficiencia de Escala e Ineficiencia X en la Banca Colombiana," Borradores de Economia 059, Banco de la Republica de Colombia.
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    10. Loretta J. Mester, 1992. "Efficiency in the savings and loan industry," Working Papers 92-14, Federal Reserve Bank of Philadelphia.
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    15. Berger, Allen N. & Hunter, William C. & Timme, Stephen G., 1993. "The efficiency of financial institutions: A review and preview of research past, present and future," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 221-249, April.
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    17. Altunbas, Y. & Chakravarty, S. P., 1998. "Efficiency measures and the banking structure in Europe," Economics Letters, Elsevier, vol. 60(2), pages 205-208, August.
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    Cited by:
    1. Dairo Estrada & Angela González Arbeláez & Javier Gutierréz Rueda, 2008. "The Effects of Diversification on Banks´ Expected Returns," BORRADORES DE ECONOMIA 004991, BANCO DE LA REPÚBLICA.
    2. Javier E. Pirateque & José H. Piñeros & Linda Mondragón, 2013. "Eficiencia de los establecimientos bancarios (EB): una aproximación mediante modelos DEA," BORRADORES DE ECONOMIA 011103, BANCO DE LA REPÚBLICA.
    3. Javier E. Pirateque & José H. Piñeros & Linda Mondragón, 2013. "Eficiencia de los establecimientos bancarios (EB): una aproximación mediante modelos DEA," Borradores de Economia 798, Banco de la Republica de Colombia.

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