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Banking inefficiency in Central and Eastern European countries under a quadratic loss function

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  • Koutsomanoli-Filippaki, Anastasia
  • Mamatzakis, Emmanuel
  • Staikouras, Christos

Abstract

We employ a quadratic loss function using a forward-looking rational expectations model to estimate the dynamics of banking inefficiency scores in Central and Eastern Europe (CEE) over the period 1998-2005. Results show that there is heterogeneity in the speed of adjustment to the long run equilibrium across countries and over time, while it appears that the recent accession to the EU has not led to an increase in the speed of adjustment, as it would be expected in light of the integration process prior to the accession. Ownership asserts certain influence on the speed at which banks correct past-period inefficiency.

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Bibliographic Info

Article provided by Elsevier in its journal Emerging Markets Review.

Volume (Year): 10 (2009)
Issue (Month): 3 (September)
Pages: 167-178

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Handle: RePEc:eee:ememar:v:10:y:2009:i:3:p:167-178

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Web page: http://www.elsevier.com/locate/inca/620356

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Keywords: Speed of adjustment Long run equilibrium Rational expectations Banking inefficiency;

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Cited by:
  1. Hryckiewicz, Aneta & Kowalewski, Oskar, 2010. "Economic determinates, financial crisis and entry modes of foreign banks into emerging markets," Emerging Markets Review, Elsevier, vol. 11(3), pages 205-228, September.
  2. Olson, Dennis & Zoubi, Taisier A., 2011. "Efficiency and bank profitability in MENA countries," Emerging Markets Review, Elsevier, vol. 12(2), pages 94-110, June.

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