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Effects of Financial Capital on Colombian Banking Efficiency

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  • Dairo Estrada

    ()

  • Poldy Osorio

    ()

Abstract

In this paper we discuss cost and profit efficiency for a sample of financial institutions on the Colombian financial market in the period 1989-2003, using stochastic frontier efficiency analysis. During the period, the cost efficient frontier deteriorates, but profit efficient frontier is relatively stable. We found significant difference when we compare the efficiency scores between types of financial intermediaries. Additionally, our analysis show that the scores for profit and cost efficiency have different distribution. We found big differences between profit and cost efficiency among the different type banks. This is evidence in favor of some banks behaving collusively and capturing oligopoly rents.

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Paper provided by Banco de la Republica de Colombia in its series Borradores de Economia with number 292.

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Handle: RePEc:bdr:borrec:292

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Keywords: Frontier; Effficiency; Cost; Profit; Financial Capital;

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Cited by:
  1. Javier E. Pirateque & José H. Piñeros & Linda Mondragón, 2013. "Eficiencia de los establecimientos bancarios (EB): una aproximación mediante modelos DEA," BORRADORES DE ECONOMIA 011103, BANCO DE LA REPÚBLICA.
  2. Javier E. Pirateque & José H. Piñeros & Linda Mondragón, 2013. "Eficiencia de los establecimientos bancarios (EB): una aproximación mediante modelos DEA," Borradores de Economia 798, Banco de la Republica de Colombia.
  3. Carlos Andrés Amaya, . "Interest Rate Setting and the Colombian Monetary Transmission Mechanism," Borradores de Economia 352, Banco de la Republica de Colombia.
  4. Jorge David Quinteo Otero & William Orlando Prieto Bustos & Fernando Barrios Aguirre & Laura Elena Leviller Guardo, 2008. "Determinantes de la eficiencia técnica en las empresas colombianas, 2001-2004," REVISTA SEMESTRE ECONÓMICO, UNIVERSIDAD DE MEDELLÍN.
  5. Dairo Estrada & Angela González Arbelaéz & Javier Gutiérrez Rueda, . "The Effects of Diversification on Banks’ Expected Returns," Borradores de Economia 524, Banco de la Republica de Colombia.
  6. Carlos Andrés Amaya G., 2005. "Interest Rate Setting And The Colombian Monetary Transmission Mechanism," BORRADORES DE ECONOMIA 002910, BANCO DE LA REPÚBLICA.

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