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Banking inefficiency in Central and Eastern European countries under a quadratic loss function

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  • Koutsomanoli-Filippaki, Anastasia
  • Mamatzakis, Emmanuel
  • Staikouras, Christos

Abstract

We employ a quadratic loss function using a forward-looking rational expectations model to estimate the dynamics of banking inefficiency scores in Central and Eastern Europe (CEE) over the period 1998-2005. Results show that there is heterogeneity in the speed of adjustment to the long run equilibrium across countries and over time, while it appears that the recent accession to the EU has not led to an increase in the speed of adjustment, as it would be expected in light of the integration process prior to the accession. Ownership asserts certain influence on the speed at which banks correct past-period inefficiency.

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  • Koutsomanoli-Filippaki, Anastasia & Mamatzakis, Emmanuel & Staikouras, Christos, 2009. "Banking inefficiency in Central and Eastern European countries under a quadratic loss function," Emerging Markets Review, Elsevier, vol. 10(3), pages 167-178, September.
    • Handle: RePEc:eee:ememar:v:10:y:2009:i:3:p:167-178
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    Cited by:

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    2. Christine J. Richmond & Dora Benedek & Ezequiel Cabezon & Bobana Cegar & Peter Dohlman & Michelle Hassine & Beata Jajko & Piotr Kopyrski & Maksym Markevych & Jacques A Miniane & Francisco J Parodi & G, 2019. "Reassessing the Role of State-Owned Enterprises in Central, Eastern and Southeastern Europe," IMF Departmental Papers / Policy Papers 19/11, International Monetary Fund.
    3. Mr. Jacques A Miniane & Ezequiel Cabezon & Mr. Sebastian Weber & Christine J. Richmond & Ms. Dora Benedek & Mr. James Roaf & Mr. Francisco J Parodi & Mr. Peter Dohlman & Rima Turk & Bobana Cegar & Mic, 2019. "Reassessing the Role of State-Owned Enterprises in Central, Eastern and Southeastern Europe," IMF Departmental Papers / Policy Papers 2019/010, International Monetary Fund.
    4. Dwumfour, Richard Adjei, 2017. "Explaining banking stability in Sub-Saharan Africa," Research in International Business and Finance, Elsevier, vol. 41(C), pages 260-279.
    5. Hryckiewicz, Aneta & Kowalewski, Oskar, 2010. "Economic determinates, financial crisis and entry modes of foreign banks into emerging markets," Emerging Markets Review, Elsevier, vol. 11(3), pages 205-228, September.
    6. Maghyereh, Aktham I. & Awartani, Basel, 2012. "Financial integration of GCC banking markets: A non-parametric bootstrap DEA estimation approach," Research in International Business and Finance, Elsevier, vol. 26(2), pages 181-195.
    7. Olson, Dennis & Zoubi, Taisier A., 2011. "Efficiency and bank profitability in MENA countries," Emerging Markets Review, Elsevier, vol. 12(2), pages 94-110, June.
    8. Khosravi, Taha, 2015. "The bank lending channel: An empirical analysis of EU accession countries from 2004-2013," MPRA Paper 66795, University Library of Munich, Germany.
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    More about this item

    Keywords

    Speed of adjustment Long run equilibrium Rational expectations Banking inefficiency;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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