IDEAS home Printed from https://ideas.repec.org/a/jec/journl/v6y2010i1p79-111.html
   My bibliography  Save this article

The Approach for Estimating Cost Growth Rates in the Taiwanese Banking Industry

Author

Listed:
  • Yung-Lieh Yang

    () (Department of Finance, Ling Tung University, Taiwan)

Abstract

The most present articles adopted the output-oriented Malmquist productivity index (OM) for estimating the production efficiency and productivity of Bank. Based on the method of Yang and Lee (2009), the research provides the new way to discuss cost efficiency and cost growth rate of Taiwanese banking industry during 1995 to 2005. The cost growth rate was decomposed into five components: technical efficiency change, allocation efficiency change, technical structure change, input price change and output scale change. Empirical results indicate 7.87% cost growth rates decline in the banking industry. Then we apply the random-effects Tobit panel data regression analysis to investigate the determinant effects in terms of the cost efficiency and cost growth rates for these banks. The results show that the average scale of these banks is larger than optimal scale. It means that the increase of banks' scale has positive relationship to cost efficiency and allocation efficiency. The index of cost efficiency is significantly improved by the decrease of Non-Performing Loan. At least, system generalized method of moment dynamic panel model results indicate that the cost growth rate of Taiwanese banks exhibits significant positive persistence.

Suggested Citation

  • Yung-Lieh Yang, 2010. "The Approach for Estimating Cost Growth Rates in the Taiwanese Banking Industry," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 6(1), pages 79-111, January.
  • Handle: RePEc:jec:journl:v:6:y:2010:i:1:p:79-111
    as

    Download full text from publisher

    File URL: http://www.jem.org.tw/content/pdf/Vol.6No.1/04.pdf
    Download Restriction: no

    File URL: http://www.jem.org.tw/content/abstract/Vol.6No.1/English/04.htm
    Download Restriction: no

    More about this item

    Keywords

    banking sector; data envelopment analysis; malmquist index; cost growth rate;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jec:journl:v:6:y:2010:i:1:p:79-111. 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: (Yi-Ju Su). General contact details of provider: http://edirc.repec.org/data/cbfcutw.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.