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Efficiency of multinational banks: an empirical investigation

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  • C. Edward Chang
  • Iftekhar Hasan
  • William Hunter

Abstract

This paper conducts a comparative analysis of the productive efficiency of foreign-owned and US-owned multinational commercial banks operating in the US. A multiproduct translog stochastic-cost frontier model approach is used to estimate cost inefficiency scores. Ordinary Least Squares and Tobit regressions are used to identify the key factors associated with inefficiency. The results indicate that foreign-owned multinational banks operating in the US are significantly less efficient than their US-owned counterparts and that large multinational banks in holding company networks carrying fewer foreign assets tend to be more efficient.

Suggested Citation

  • C. Edward Chang & Iftekhar Hasan & William Hunter, 1998. "Efficiency of multinational banks: an empirical investigation," Applied Financial Economics, Taylor & Francis Journals, vol. 8(6), pages 689-696.
  • Handle: RePEc:taf:apfiec:v:8:y:1998:i:6:p:689-696
    DOI: 10.1080/096031098332727
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    References listed on IDEAS

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    1. Berger, Allen N. & DeYoung, Robert, 1997. "Problem loans and cost efficiency in commercial banks," Journal of Banking & Finance, Elsevier, vol. 21(6), pages 849-870, June.
    2. Mervyn K. Lewis & Kevin T. Davis, 1987. "Domestic and International Banking," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121263.
    3. Charles W. Calomiris & Mark S. Carey, 1994. "Loan market competition between foreign and U.S. banks: some facts about loans and borrowers," Proceedings 38, Federal Reserve Bank of Chicago.
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