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Effect of Internationalization on the Cost Efficiency of Taiwan’s Banks

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  • Cheng-Ping Cheng
  • Lien-Wen Liang
  • Chen-Ta Huang

Abstract

We focus on the effect of internationalization on the cost efficiency of banks by studying Taiwan as a sample for developing countries. We find that (1) increasing overseas businesses and foreign exchange deposits increases cost efficiency; (2) expanding offshore banking units increases bank efficiency; and (3) the profitability of a bank’s overseas branch is not a critical factor behind the differences in cost efficiency across both financial holding company (FHC) banks and non-financial holding company (non-FHC) banks. Finally, our metafrontier empirical results illustrate that FHC banks in Taiwan show better technical performance in cost control than non-FHC banks.

Suggested Citation

  • Cheng-Ping Cheng & Lien-Wen Liang & Chen-Ta Huang, 2014. "Effect of Internationalization on the Cost Efficiency of Taiwan’s Banks," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 50(S6), pages 204-228, November.
    • Handle: RePEc:mes:emfitr:v:50:y:2014:i:s6:p:204-228
    DOI: 10.1080/1540496X.2014.1013857
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    Cited by:

    1. Yildirim, Canan & Kasman, Adnan & Gulamhussen, Mohamed Azzim, 2023. "Efficiency of multinational banks: Impacts of geographic and product loci," International Business Review, Elsevier, vol. 32(5).

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