Differential impact of Korean banking system reforms on bank productivity
We study the impact of banking system reforms during a crisis following a period of undisciplined lending. Regulatory changes aimed at strengthening the banks' capital structure and risk management practices do not have a uniform impact on bank productivity, but rather favor financially sound or strategically privileged banks. We present evidence documenting the differential impact of regulatory reforms on Korean commercial bank productivity over the period 1995-2005. Average technical efficiency of banks decreased during the financial crisis of 1997-1998. It improved following the subsequent bank restructuring and continued to improve through 2005. The capital adequacy ratio is positively associated with banks' technical efficiency. The non-performing loans ratio is negatively associated with technical efficiency. Both relationships are accentuated during the crisis but attenuated after the reforms.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
- Sturm, Jan-Egbert & Williams, Barry, 2004. "Foreign bank entry, deregulation and bank efficiency: Lessons from the Australian experience," Journal of Banking & Finance, Elsevier, vol. 28(7), pages 1775-1799, July.
- Leightner, Jonathan E. & Lovell, C. A. Knox, 1998. "The Impact of Financial Liberalization on the Performance of Thai Banks," Journal of Economics and Business, Elsevier, vol. 50(2), pages 115-131, March.
- Mester, Loretta J., 1997.
"Measuring efficiency at U.S. banks: Accounting for heterogeneity is important,"
European Journal of Operational Research,
Elsevier, vol. 98(2), pages 230-242, April.
- Loretta J. Mester, 1996. "Measuring efficiency at U.S. banks: accounting for heterogeneity is important," Working Papers 96-11, Federal Reserve Bank of Philadelphia.
- Koutsomanoli-Filippaki, Anastasia & Margaritis, Dimitris & Staikouras, Christos, 2009. "Efficiency and productivity growth in the banking industry of Central and Eastern Europe," Journal of Banking & Finance, Elsevier, vol. 33(3), pages 557-567, March.
- Berger, Allen N. & Humphrey, David B., 1997.
"Efficiency of financial institutions: International survey and directions for future research,"
European Journal of Operational Research,
Elsevier, vol. 98(2), pages 175-212, April.
- Allen N. Berger & David B. Humphrey, 1997. "Efficiency of Financial Institutions: International Survey and Directions for Future Research," Center for Financial Institutions Working Papers 97-05, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Allen N. Berger & David B. Humphrey, 1997. "Efficiency of financial institutions: international survey and directions for future research," Finance and Economics Discussion Series 1997-11, Board of Governors of the Federal Reserve System (U.S.).
- Hancock, Diana, 1985. "The Financial Firm: Production with Monetary and Nonmonetary Goods," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 859-880, October.
- Doran, H. E. & Griffiths, W. E., 1983. "On the relative efficiency of estimators which include the initial observations in the estimation of seemingly unrelated regressions with first-order autoregressive disturbances," Journal of Econometrics, Elsevier, vol. 23(2), pages 165-191, October.
- Sophocles N. Brissimis & Manthos D. Delis & Nikolaos I. Papanikolaou, 2008.
"Exploring the Nexus between Banking Sector Reform and Performance: Evidence from Newly Acceded EU Countries,"
73, Bank of Greece.
- Brissimis, Sophocles N. & Delis, Manthos D. & Papanikolaou, Nikolaos I., 2008. "Exploring the nexus between banking sector reform and performance: Evidence from newly acceded EU countries," Journal of Banking & Finance, Elsevier, vol. 32(12), pages 2674-2683, December.
- N. Papanikolaou & M. Delis & S. Brissimis, 2008. "Exploring the nexus between banking sector reform and performance: Evidence from newly acceded EU countries," DEOS Working Papers 0917, Athens University of Economics and Business.
- Kao, Chiang & Liu, Shiang-Tai, 2004. "Predicting bank performance with financial forecasts: A case of Taiwan commercial banks," Journal of Banking & Finance, Elsevier, vol. 28(10), pages 2353-2368, October.
- Allen N. Berger & Gerald A. Hanweck & David B. Humphrey, 1986.
"Competitive viability in banking: scale, scope, and product mix economies,"
Research Papers in Banking and Financial Economics
82, Board of Governors of the Federal Reserve System (U.S.).
- Berger, Allen N. & Hanweck, Gerald A. & Humphrey, David B., 1987. "Competitive viability in banking : Scale, scope, and product mix economies," Journal of Monetary Economics, Elsevier, vol. 20(3), pages 501-520, December.
- Baek, Jae-Seung & Kang, Jun-Koo & Suh Park, Kyung, 2004. "Corporate governance and firm value: evidence from the Korean financial crisis," Journal of Financial Economics, Elsevier, vol. 71(2), pages 265-313, February.
- Rajiv Banker & Hsihui Chang & Ram Natarajan, 2007. "Estimating DEA technical and allocative inefficiency using aggregate cost or revenue data," Journal of Productivity Analysis, Springer, vol. 27(2), pages 115-121, April.
- Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
- Allen N. Berger & David B. Humphrey, 1990.
"Measurement and efficiency issues in commercial banking,"
Finance and Economics Discussion Series
151, Board of Governors of the Federal Reserve System (U.S.).
- Allen N. Berger & David B. Humphrey, 1992. "Measurement and Efficiency Issues in Commercial Banking," NBER Chapters, in: Output Measurement in the Service Sectors, pages 245-300 National Bureau of Economic Research, Inc.
- Sathye, Milind, 2001. "X-efficiency in Australian banking: An empirical investigation," Journal of Banking & Finance, Elsevier, vol. 25(3), pages 613-630, March.
- Banker, Rajiv D. & Thrall, R. M., 1992. "Estimation of returns to scale using data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 62(1), pages 74-84, October.
- Banker, Rajiv D & Maindiratta, Ajay, 1988. "Nonparametric Analysis of Technical and Allocative Efficiencies in Production," Econometrica, Econometric Society, vol. 56(6), pages 1315-1332, November.
- Park, Kang H. & Weber, William L., 2006. "Profitability of Korean banks: Test of market structure versus efficient structure," Journal of Economics and Business, Elsevier, vol. 58(3), pages 222-239.
- Zhao, Tianshu & Casu, Barbara & Ferrari, Alessandra, 2010. "The impact of regulatory reforms on cost structure, ownership and competition in Indian banking," Journal of Banking & Finance, Elsevier, vol. 34(1), pages 246-254, January.
- Rajiv D. Banker, 1993. "Maximum Likelihood, Consistency and Data Envelopment Analysis: A Statistical Foundation," Management Science, INFORMS, vol. 39(10), pages 1265-1273, October.
- Sealey, Calvin W, Jr & Lindley, James T, 1977. "Inputs, Outputs, and a Theory of Production and Cost at Depository Financial Institutions," Journal of Finance, American Finance Association, vol. 32(4), pages 1251-1266, September.
- Banker, Rajiv D. & Chang, Hsihui & Cunningham, Reba, 2003. "The public accounting industry production function," Journal of Accounting and Economics, Elsevier, vol. 35(2), pages 255-281, June.
- Das, Abhiman & Ghosh, Saibal, 2006. "Financial deregulation and efficiency: An empirical analysis of Indian banks during the post reform period," Review of Financial Economics, Elsevier, vol. 15(3), pages 193-221.
- Park, Rolla Edward & Mitchell, Bridger M., 1980. "Estimating the autocorrelated error model with trended data," Journal of Econometrics, Elsevier, vol. 13(2), pages 185-201, June.
When requesting a correction, please mention this item's handle: RePEc:eee:jbfina:v:34:y:2010:i:7:p:1450-1460. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.