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Exploring the nexus between banking sector reform and performance: Evidence from newly acceded EU countries

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  • Brissimis, Sophocles N.
  • Delis, Manthos D.
  • Papanikolaou, Nikolaos I.

Abstract

The aim of this study is to examine the relationship between banking sector reform and bank performance - measured in terms of efficiency, total factor productivity growth and net interest margin - accounting for the effects through competition and bank risk-taking. To this end, we develop an empirical model of bank performance, which is consistently estimated using recent econometric techniques. The model is applied to bank panel data from ten newly acceded EU countries. The results indicate that both banking sector reform and competition exert a positive impact on bank efficiency, while the effect of reform on total factor productivity growth is significant only toward the end of the reform process. Finally, the effect of capital and credit risk on bank performance is in most cases negative, while it seems that higher liquid assets reduce the efficiency and productivity of banks.

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  • Brissimis, Sophocles N. & Delis, Manthos D. & Papanikolaou, Nikolaos I., 2008. "Exploring the nexus between banking sector reform and performance: Evidence from newly acceded EU countries," Journal of Banking & Finance, Elsevier, vol. 32(12), pages 2674-2683, December.
    • Handle: RePEc:eee:jbfina:v:32:y:2008:i:12:p:2674-2683
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    More about this item

    Keywords

    Bank performance Banking sector reform Competition Risk-taking;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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