Analysis of the Efficiency and Profitability of the Japanese Banking System
AbstractThe 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 InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 08/63.
Date of creation: 01 Mar 2008
Date of revision:
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Postal: International Monetary Fund, Washington, DC USA
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-25 (All new papers)
- NEP-BAN-2008-03-25 (Banking)
- NEP-EFF-2008-03-25 (Efficiency & Productivity)
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