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An analysis of inefficiencies in banking: a stochastic cost frontier approach Author info | Abstract | Publisher info | Download info | Related research | Statistics Simon H. Kwan
Robert A. Eisenbeis
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This paper examines the properties of X-inefficiency and the relations of X-inefficiency with risk-taking and stock returns for U.S. banking firms. After controlling for scale differences, the average small size banking firm is found to be relatively less efficient than the average large firm. Small firms also exhibit higher variations in X-inefficiencies than their larger counterparts. While the average X-inefficiency appears to be declining over time, the rank orderings of X-inefficiency are found to be quite persistent. Furthermore, less efficient banking firms are found to be associated with higher risk-taking, and firm-specific X-inefficiencies are significantly correlated with individual stock returns for smaller banking firms.
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Article provided by Federal Reserve Bank of San Francisco in its journal Economic Review .
Volume (Year): (1996)
Issue (Month): ()
Pages: 16-26
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Handle: RePEc:fip:fedfer:y:1996:p:16-26:n:2Contact details of provider: Postal: P.O. Box 7702, San Francisco, CA 94120-7702 Phone: (415) 974-2000 Fax: (415) 974-3333 Email: Web page: http://www.frbsf.org/ More information through EDIRC
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Keywords: Banks and banking - Costs ; Risk ; Other versions of this item:
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Edward J. Kane & Haluk Unal, 1990.
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Flannery, Mark J & James, Christopher M, 1984.
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Ronn, Ehud I & Verma, Avinash K, 1986.
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Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977.
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Gorton, Gary & Rosen, Richard, 1995.
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Kane, Edward J & Unal, Haluk, 1990.
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Journal of Finance ,
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Berger, Allen N. & Humphrey, David B., 1991.
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Other versions: Merton, Robert C., 1977.
"An analytic derivation of the cost of deposit insurance and loan guarantees An application of modern option pricing theory ,"
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Kane, Edward J. & Kaufman, George G., 1993.
"Incentive conflict in deposit-institution regulation: evidence from Australia ,"
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Berger, Allen N. & Hunter, William C. & Timme, Stephen G., 1993.
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Journal of Banking & Finance ,
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Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Allen N. Berger & Robert DeYoung, 1997.
"Problem loans and cost efficiency in commercial banks ,"
Finance and Economics Discussion Series
1997-8, Board of Governors of the Federal Reserve System (U.S.).
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Other versions:
Allen N. Berger & Robert DeYoung, 1995.
"Problem Loans and Cost Efficiency in Commercial Banks ,"
Center for Financial Institutions Working Papers
96-01, Wharton School Center for Financial Institutions, University of Pennsylvania.
Berger, Allen N. & DeYoung, Robert, 1997.
"Problem loans and cost efficiency in commercial banks ,"
Journal of Banking & Finance ,
Elsevier, vol. 21(6), pages 849-870, June.
[Downloadable!] (restricted) Allen N. Berger & Robert DeYoung, 1996.
"Problem loans and cost efficiency in commercial banks ,"
Proceedings ,
Federal Reserve Bank of Chicago, issue May, pages 219-236.
Gabriel Asaftei & Subal Kumbhakar, 2008.
"Regulation and efficiency in transition: the case of Romanian banks ,"
Journal of Regulatory Economics ,
Springer, vol. 33(3), pages 253-282, June.
[Downloadable!] (restricted)
Allen N. Berger & Loretta J. Mester, 1997.
"Inside the black box: what explains differences in the efficiencies of financial institutions? ,"
Working Papers
97-1, Federal Reserve Bank of Philadelphia.
[Downloadable!]
Other versions:
Allen N. Berger & Loretta J. Mester, 1997.
"Inside the Black Box: What Explains Differences in the Efficiencies of Financial Institutions? ,"
Center for Financial Institutions Working Papers
97-04, Wharton School Center for Financial Institutions, University of Pennsylvania.
[Downloadable!] Allen N. Berger & Loretta J. Mester, 1997.
"Inside the black box: what explains differences in the efficiencies of financial institutions? ,"
Finance and Economics Discussion Series
1997-10, Board of Governors of the Federal Reserve System (U.S.).
[Downloadable!] Berger, Allen N. & Mester, Loretta J., 1997.
"Inside the black box: What explains differences in the efficiencies of financial institutions? ,"
Journal of Banking & Finance ,
Elsevier, vol. 21(7), pages 895-947, July.
[Downloadable!] (restricted) Simon H. Kwan, 2006.
"The X-Efficiency of Commerical Banks in Hong Kong ,"
Working Papers
122002, Hong Kong Institute for Monetary Research.
[Downloadable!]
J.A. Bikker, 1999.
"Efficiency in the European banking industry: an exploratory analysis to rank countries ,"
Research Series Supervision (discontinued)
18, Netherlands Central Bank, Directorate Supervision.
[Downloadable!]
Joseph P. Hughes & Choon-Geol Moon & Robert DeYoung, 2000.
"Efficient Risk-Taking and Regulatory Covenant Enforcement in a Deregulated Banking Industry ,"
Departmental Working Papers
200007, Rutgers University, Department of Economics.
[Downloadable!]
Simon H. Kwan, 2001.
"The X-efficiency of commercial banks in Hong Kong ,"
Working Papers in Applied Economic Theory
2002-14, Federal Reserve Bank of San Francisco.
[Downloadable!]
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