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Analysis of the Efficiency and Profitability of the Japanese Banking System

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Author Info

  • Elena Loukoianova

Abstract

The paper analyzes the efficiency and profitability of Japanese banks from 2000-06. It uses a non-parametric approach, the data envelopment analysis (DEA) to analyze banks'' cost and revenue efficiency. The results show that the performance of Japanese banks has steadily improved since 2001, but there are significant differences within the banking sector, with regional banks being less cost and revenue efficient relative to both City and Trust banks. While Japanese bank profitability is low compared to that in other advanced countries, there is considerable potential for efficiency gains, particularly through increased cost-sharing arrangements among regional banks, consolidation of regional banks with major or other regional banks, and the creation of bank consortia to pool resources for asset and risk management.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 08/63.

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Length: 34
Date of creation: 01 Mar 2008
Date of revision:
Handle: RePEc:imf:imfwpa:08/63

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Related research

Keywords: Banking; Banking systems; Profits; commercial banks; savings banks; banking system; bankers association; bankers; banking sector; return on assets; capital markets; net interest margin; bank of japan; return on equity; bank branches; banking activities; banking services; savings bank; retail banking; bank profitability; pension funds; universal banking; national bank; bank operations; regional bank; profitability analysis; banking products; insurance companies; pension fund management; mutual funds; banking service; bank law; bank consolidation; country comparison; pension fund; foreign bond; bank governance; subordinated debt; financial risk; banks ? assets; bank intermediation; banking statistics; bank groups; interbank market; banking sectors; bank deposits;

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References

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  1. Drake, Leigh & Hall, Maximilian J. B., 2003. "Efficiency in Japanese banking: An empirical analysis," Journal of Banking & Finance, Elsevier, vol. 27(5), pages 891-917, May.
  2. Altunbas, Yener & Liu, Ming-Hau & Molyneux, Philip & Seth, Rama, 2000. "Efficiency and risk in Japanese banking," Journal of Banking & Finance, Elsevier, vol. 24(10), pages 1605-1628, October.
  3. McKillop, Donal G. & Glass, J. Colin & Morikawa, Yukio, 1996. "The composite cost function and efficiency in giant Japanese banks," Journal of Banking & Finance, Elsevier, vol. 20(10), pages 1651-1671, December.
  4. Gianni De Nicoló & M. G. Zephirin & Philip F. Bartholomew & Jahanara Zaman, 2003. "Bank Consolidation, Internationalization and Conglomeration," IMF Working Papers 03/158, International Monetary Fund.
  5. Joaquin Maudos & Jose Pastor, 2001. "Cost and profit efficiency in banking: an international comparison of Europe, Japan and the USA," Applied Economics Letters, Taylor & Francis Journals, vol. 8(6), pages 383-387.
  6. International Monetary Fund, 2004. "Germany's Three-Pillar Banking System," IMF Occasional Papers 233, International Monetary Fund.
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Citations

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Cited by:
  1. Cristi SPULBAR & Mihai NITOI & Simona IACOVITA, 2009. "Efficiency and productivity in banks developed through Data Envelopment Analysis: a cross country-perspective," Finante - provocarile viitorului (Finance - Challenges of the Future), University of Craiova, Faculty of Economics and Business Administration, vol. 1(10), pages 92-100, December.
  2. Nikolay Nenovsky & Martin Ivanov & Gergana Mihaylova, 2008. "The Evolution of Bulgarian Banks' Efficiency During the Twenties: A Dea Approach," Working Papers 82, Bank of Greece.

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