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Cost Efficiency in UK and Irish Credit Institutions

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  • Fitzpatrick, Trevor

    (Central Bank and Financial Services Authority of Ireland)

  • McQuinn, Kieran

    (Central Bank and Financial Services Authority of Ireland)

Abstract

This paper presents aggregated cost efficiency scores for a balanced panel of British and Irish credit institutions and relates these scores to loan loss reserves as a first step in investigating their usefulness as possible indicators of financial fragility. The efficiency scores are oobtained using the two most popular methods of efficiency measurement - data envelopment analysis (DEA) and the stochastic frontiers approach.

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Bibliographic Info

Paper provided by Central Bank of Ireland in its series Research Technical Papers with number 3/RT/04.

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Length: 35 pages
Date of creation: Apr 2004
Date of revision:
Handle: RePEc:cbi:wpaper:3/rt/04

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  2. 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.
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  6. Jose Pastor, 2002. "Credit risk and efficiency in the European banking system: A three-stage analysis," Applied Financial Economics, Taylor & Francis Journals, vol. 12(12), pages 895-911.
  7. Battese, George E. & Corra, Greg S., 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(03), December.
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Cited by:
  1. Fitzpatrick, Trevor & McQuinn, Kieran, 2005. "Measuring Bank Profit Efficiency," Research Technical Papers 3/RT/05, Central Bank of Ireland.
  2. Behr, Andreas & Tente, Sebastian, 2008. "Stochastic frontier analysis by means of maximum likelihood and the method of moments," Discussion Paper Series 2: Banking and Financial Studies 2008,19, Deutsche Bundesbank, Research Centre.

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