Efficiency of Banks: Recent Evidence from the Transition Economies of Europe, 1993-2000
AbstractThis study examines the cost and profit efficiency of banking sectors in twelve transition economies of Central and Eastern Europe (CEE) over the period 1993-2000, using the stochastic frontier approach (SFA) and the distribution-free approach (DFA). The managerial inefficiencies in CEE banking markets were found to be significant, with average cost efficiency level for 12 countries of 72% and 77% by the DFA and the SFA, respectively. The alternative profit efficiency levels are found to be significantly lower relative to cost efficiency. According to the SFA, approximately one-third of banks' profits are lost to inefficiency, and almost one-half according to the DFA. The results of the second-stage regression analyses suggest that higher efficiency levels are associated with large and well-capitalized banks. The degree of competition has a positive influence on cost efficiency and a negative one on profit efficiency, while market concentration is negatively linked to efficiency. Finally, foreign banks are found to be more cost efficient but less profit efficient relative to domestically owned private banks and state-owned banks.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal The European Journal of Finance.
Volume (Year): 13 (2007)
Issue (Month): 2 ()
Contact details of provider:
Web page: http://www.tandfonline.com/REJF20
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Cull, Robert & Soledad Martinez Peria, Maria, 2010. "Foreign bank participation in developing countries : what do we know about the drivers and consequences of this phenomenon?," Policy Research Working Paper Series 5398, The World Bank.
- Hsing-Chin Hsiao & Mei-Hwa Lin, 2013. "Taiwan second financial restructuring and commercial bank productivity growth: M&As impact," Review of Accounting and Finance, Emerald Group Publishing, vol. 12(4), pages 327-350, September.
- Jose L. Gallizo & Jordi Moreno & Ioana Iuliana Pop (Grigorescu), 2011. "Banking Efficiency And European Integration. Implications Of The Banking Reform In Romania," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(13), pages 25.
- Euston QUAH, 2012. "Cost-Benefit Analysis in Developing Countries: What’s Different?," Economic Growth centre Working Paper Series 1205, Nanyang Technolgical University, School of Humanities and Social Sciences, Economic Growth centre.
- Kiril Tochkov & Nikolay Nenovsky, 2009. "Efficiency of commercial banks in Bulgaria in the wake of EU accession," ICER Working Papers 21-2009, ICER - International Centre for Economic Research.
- Benjamin M. Tabak & Dimas M. Fazio & Daniel O. Cajueiro, 2011. "Profit, Cost and Scale Efficiency for Latin American Banks: Concentration-Performance Relationship," Working Papers Series 244, Central Bank of Brazil, Research Department.
- Magdalena Radulescu & Marinela Tanascovici, 2012. "Profitability of the CEE Banking Systems During the Crisis Period," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 12(1), pages 274-291.
- Kiril Tochkov & Nikolay Nenovsk, 2010. "Institutional Reforms, EU Accession, and Bank Efficiency: Evidence from Bulgaria," Working Papers 201005, Texas Christian University, Department of Economics.
- Dániel Holló & Márton Nagy, 2006. "Bank Efficiency in the Enlarged European Union," BIS Papers chapters, in: Bank for International Settlements (ed.), The banking system in emerging economies: how much progress has been made?, volume 28, pages 217-35 Bank for International Settlements.
- MEREUTA, Cezar & CAPRARU, Bogdan, 2012. "Romanian Banking Competition. A New Structural Approach," Working Papers of National Institute of Economic Research 120722, National Institute of Economic Research.
- Neeltje van Horen & Stijn Claessens, 2009.
"Being a Foreigner Among Domestic Banks: Asset or Liability?,"
IMF Working Papers
09/273, International Monetary Fund.
- Claessens, Stijn & van Horen, Neeltje, 2012. "Being a foreigner among domestic banks: Asset or liability?," Journal of Banking & Finance, Elsevier, vol. 36(5), pages 1276-1290.
- Stijn Claessens & Neeltje van Horen, 2009. "Being a Foreigner among Domestic Banks: Asset or Liability?," DNB Working Papers 224, Netherlands Central Bank, Research Department.
- Claessens, Stijn & van Horen, Neeltje, 2009. "Being a foreigner among domestic banks: Asset or liability?," MPRA Paper 13467, University Library of Munich, Germany.
- Daniel Stavarek, 2005. "Efficiency of Banks in Regions at Different Stage of European Integration Process," Finance 0502020, EconWPA.
- Dong Xiang & Abul Shamsuddin & Andrew C Worthington, 2011. "A comparative technical, cost and profit efficiency analysis of Australian, Canadian and UK banks: Feasible efficiency improvements in the context of controllable and uncontrollable factors," Discussion Papers in Finance finance:201119, Griffith University, Department of Accounting, Finance and Economics.
- Mette Asmild & Minyan Zhu, 2012. "Bank efficiency and risk during the financial crisis: Evidence from weight restricted DEA models," MSAP Working Paper Series 03_2012, University of Copenhagen, Department of Food and Resource Economics.
- Andries Alin Marius & Capraru Bogdan, 2011. "Competition In Romanian Banking Sector," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 455-460, July.
- Chortareas, Georgios E. & Girardone, Claudia & Ventouri, Alexia, 2012. "Bank supervision, regulation, and efficiency: Evidence from the European Union," Journal of Financial Stability, Elsevier, vol. 8(4), pages 292-302.
- Bank for International Settlements, 2006. "The banking system in emerging economies: how much progress has been made?," BIS Papers, Bank for International Settlements, number 28, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.