Cost efficiency of banks in transition: Evidence from 289 banks in 15 post-communist countries
AbstractTo understand the transformation of banking in the post-communist transition, this paper examines the cost efficiency of 289 banks in 15 east European countries. The findings showed that banking systems in which foreign-owned banks have a larger share of total assets record lower costs and that the association between a country’s progress in banking reform and cost efficiency is non-linear. Early stages of reform are associated with cost reductions, while costs tend to rise at more advanced stages. Private banks are more efficient than state-owned banks, but there are differences among private banks. Privatised banks with majority foreign ownership are the most efficient and those with domestic ownership are the least.
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Bibliographic InfoPaper provided by European Bank for Reconstruction and Development, Office of the Chief Economist in its series Working Papers with number 86.
Length: 30 pages
Date of creation: Apr 2004
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Transition economies; banking; cost efficiency;
Find related papers by JEL classification:
- C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General
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- Claeys, Sophie & Vander Vennet, Rudi, 2008. "Determinants of bank interest margins in Central and Eastern Europe: A comparison with the West," Economic Systems, Elsevier, vol. 32(2), pages 197-216, June.
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