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Efficiency and Stock Performance of Banks in Transition Countries: Is There A Relationship?

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  • G lin Vardar

    (Izmir University of Economics,Department of International Trade and Finance,Izmir, TURKEY)

Abstract

The study investigates the link between the cost and profit efficiency scores of the banks in the Central and Eastern European Countries as well as Turkey along with their stock price performance to determine whether the efficiency scores are priced accordingly in bank stocks. Changes in efficiency scores of banks, obtained from Stochastic Frontier Analysis (SFA) model, are regressed against their stock price performance by applying fixed effects panel regression technique. Empirical results indicate that changes in profit efficiency estimates have a positive and significant impact on stock returns; however, a significant but negative relationship is found between changes in cost efficiency and stock returns

Suggested Citation

  • G lin Vardar, 2013. "Efficiency and Stock Performance of Banks in Transition Countries: Is There A Relationship?," International Journal of Economics and Financial Issues, Econjournals, vol. 3(2), pages 355-369.
    • Handle: RePEc:eco:journ1:2013-02-9
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    References listed on IDEAS

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    5. Ana Lozano-Vivas & Jesús T. Pastor & Iftekhar Hasan, 2001. "European Bank Performance Beyond Country Borders: What Really Matters?," Review of Finance, European Finance Association, vol. 5(1-2), pages 141-165.
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    Cited by:

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    2. Anwar Azazi, 2020. "CEO Compensation and Firm Performance in Emerging Market: Evidence from Indonesia Selected Listed Banks," GATR Journals afr191, Global Academy of Training and Research (GATR) Enterprise.
    3. Alshammari, Ahmad Alrazni & Alhabshi, Syed Musa & Saiti, Buerhan, 2019. "The impact of oil prices and the financial market on cost efficiency in the insurance and Takaful sectors: Evidence from a stochastic frontier analysis," Economic Systems, Elsevier, vol. 43(3).

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    More about this item

    Keywords

    Central and Eastern European Banking; SFA; Efficiency; Stock returns;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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