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-Bank Cost Efficiency As Distribution Dynamics: Controlling For Specialization Is Important

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  • Emili Tortosa Ausina

    ()
    (Universitat Jaume I)

Abstract

This paper analyzes the dynamics of cost efficiency scores in the Spanish banking industry during the period 1985-1995 and asks how such dynamics are influenced by specialization. Efficiency has been estimated through a nonparametric approach, and a model of distributions dynamics has been applied to assess the evolution of efficiency scores over time. Results show that efficiency at industry level (mean efficiency) has increased importantly and that, considering how the entire distribution evolves, there are some important patterns that mean and standard deviation fail in uncovering, like multi-modality. In addition, controlling for each firm¿s output mix sheds mor light on efficiency dynamics, as efficiency scores tend to become closer much faster. El presente trabajo tiene por objeto el estudio de la dinámica de los índices de eficiencia en la industria bancaria española durante el periodo 1985-1995, así como la manera en que dicha dinámica se ve condicionada por la especialización. La eficiencia se estima a través de un enfoque no paramétrico, y se aplica un modelo de dinámica de las distribuciones para valorar la evolución de los índices de eficiencia en el tiempo. Los resultados indican que la eficiencia a nivel de industria (eficiencia media) se ha incrementado y que, considerando la evolución de la totalidad de la distribución, existen patrones importantes imposibles de detectar por la media y la desviación típica, como la multi-modalidad. Asimismo, condicionar por la especialización de cada empresa arroja más luz sobre la dinámica de la eficiencia, pues los índices tienden a aproximarse entre sí más rápidamente.

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File URL: http://www.ivie.es/downloads/docs/wpasec/wpasec-1999-15.pdf
File Function: Fisrt version / Primera version, 1999
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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie EC with number 1999-15.

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Length: 33 pages
Date of creation: Nov 1999
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasec:1999-15

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Related research

Keywords: Bancos; dinámica de la distribución; eficiencia-X; eficiencia en costes. Banking; distribution dynamics; X-efficiency; cost efficiency; product mix.;

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References

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  1. PARK, Byeong & TURLACH, Berwin, 1992. "Practical performance of several data driven bandwidth selectors," CORE Discussion Papers 1992005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  9. Francisco Pérez García & Emili Tortosa Ausina, 1998. "Product Mix Of The Spanish Banking Firms: Do Competition Clubs Exist?," Working Papers. Serie EC 1998-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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  12. Resti, Andrea, 1997. "Evaluating the cost-efficiency of the Italian Banking System: What can be learned from the joint application of parametric and non-parametric techniques," Journal of Banking & Finance, Elsevier, vol. 21(2), pages 221-250, February.
  13. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
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  17. Emili Tortosa Ausina, 1999. "-Convergence In Efficiency Of The Spanish Banking Firms As Distribution Dynamics," Working Papers. Serie EC 1999-14, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  18. Quah, Danny, 1993. " Galton's Fallacy and Tests of the Convergence Hypothesis," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 427-43, December.
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  22. Vivas, Ana Lozano, 1997. "Profit efficiency for Spanish savings banks," European Journal of Operational Research, Elsevier, vol. 98(2), pages 381-394, April.
  23. Rafael Domenech Vilariño, 1993. "Funciones de costes para la banca española: un análisis con datos de panel," Investigaciones Economicas, Fundación SEPI, vol. 17(2), pages 263-284, May.
  24. José Manuel Pastor Monsálvez, 1995. "Eficiencia, Cambio Productivo Y Cambio Técnico En Los Bancos Y Cajas De Ahorro Españolas: Un Análisis Frontera No Paramétrico," Working Papers. Serie EC 1995-09, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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Cited by:
  1. Fadzlan SUFIAN, 2009. "Analysis Of The Relevance Of Non-Traditional Activities Items Upon The Efficiency Of Chinese Banks: A Non-Stochastic Frontier DEA Approach," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 4, pages 83-102, November.
  2. Jose Pastor & Lorenzo Serrano, 2006. "The Effect of Specialisation on Banks' Efficiency: An International Comparison," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(1), pages 125-149.

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