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The X-efficiency of commercial banks in Hong Kong Author info | Abstract | Publisher info | Download info | Related research | Statistics Simon H. Kwan
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This paper uses the stochastic econometric cost frontier approach to investigate the cost efficiency of commercial banks in Hong Kong. On average, the X-efficiency of Hong Kong banks is found to be about 16 to 30 percent of observed total costs, which is comparable to the findings in the U.S. banking industry. X-efficiency is found to decline over time, indicating that banks in Hong Kong are now operating closer to the cost frontier than before. This is consistent with technological innovation that might have occurred in the Hong Kong banking industry. Furthermore, the average large bank in Hong Kong is found to be less efficient than the average small bank, particularly during the earlier time periods. Finally, X-efficiency is found to be related to certain bank characteristics. Specifically, X-efficiency is found to decline with bank size, deposit-to-asset ratio, loan-to-asset ratios, provision for loan loss, and loan growth, and to increase with off-balance sheet activities.
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Paper provided by Federal Reserve Bank of San Francisco in its series Working Papers in Applied Economic Theory with number
2002-14.
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Date of creation: 2001Date of revision:
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Keywords: Hong Kong ; Banks and banking - Asia ; 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.: Robert A. Eisenbeis & Gary D. Ferrier & Simon H. Kwan, 1999.
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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.)
Stefan Gerlach & Wensheng Peng & Chang Shu, 2005.
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012005, Hong Kong Institute for Monetary Research.
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Other versions: Muliaman D. Hadad & Maximilian J. B. Hall & Wimboh Santoso & Ricky Satria & Karligash Kenjegalieva & Richard Simper, 2008.
"Banking Efficiency and Stock Market Performance: An Analysis of Listed Indonesian Banks ,"
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Chun-Yu Ho, 2007.
"Deregulation, Competition and Consumer Welfare in Banking Market: Evidence from Hong Kong ,"
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242007, Hong Kong Institute for Monetary Research.
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Kauko, Karlo, 2007.
"Managers and efficiency in banking ,"
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