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Cost efficiency of the banking industry in the South Eastern European region

Author

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

Abstract

This paper analyses cost efficiency in the banking sector of six South Eastern European countries over the period 1998-2003. A stochastic frontier approach, incorporating firm-specific and country-related variables, indicates a generally low level of cost efficiency, with significant inefficiency differences among countries. Foreign banks and banks with higher foreign bank ownership involvement are associated with lower inefficiency. Furthermore, we observe a negative correlation of cost inefficiency with bank capitalization and firm market share, and a positive one with the fraction of loans in the asset portfolio.

Suggested Citation

  • Staikouras, Christos & Mamatzakis, Emmanuel & Koutsomanoli-Filippaki, Anastasia, 2008. "Cost efficiency of the banking industry in the South Eastern European region," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 18(5), pages 483-497, December.
    • Handle: RePEc:eee:intfin:v:18:y:2008:i:5:p:483-497
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