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Convergence in banking efficiency across European countries

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  • Weill, Laurent

Abstract

Our paper aims to check whether financial integration has taken place on the EU banking markets, by investigating the convergence in banking efficiency for European countries between 1994 and 2005. We provide evidence of cross-country differences in cost efficiency and of an improvement in cost efficiency for all EU countries. [beta] and [sigma] convergence tests for panel data show a process in convergence in cost efficiency between EU countries. Robustness checks with alternative specifications confirm these findings. These results support the view that financial integration has taken place on the EU banking markets in the recent years.

Suggested Citation

  • Weill, Laurent, 2009. "Convergence in banking efficiency across European countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 19(5), pages 818-833, December.
  • Handle: RePEc:eee:intfin:v:19:y:2009:i:5:p:818-833
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    Keywords

    Banking Convergence Efficiency European integration Stochastic frontier approach;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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