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Technical Change in Banking: Evidence From Transition Countries


  • Adnan Kasman
  • Saadet Kirbas-Kasman


This paper investigates the effect of technical change on the costs of banking firms operating in 11 Central and Eastern European countries using Fourier-flexible cost function specification for the period 1995-2002. A common cost frontier with country-specific variables is employed in order to take into account macro-economic and regulatory conditions that vary over country and time. Our findings suggest that the rate of reduction in costs resulting from technical change increased during the sample period. Banks operating in Hungary, Czech Republic and Poland benefited more from technical change than their counterparts. In terms of cost reduction, large banks benefited more from technical progress. This indicates that large banks are more able to change their optimal input mix in response to changes in technology.

Suggested Citation

  • Adnan Kasman & Saadet Kirbas-Kasman, 2006. "Technical Change in Banking: Evidence From Transition Countries," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 13(1), pages 129-144.
  • Handle: RePEc:taf:ijecbs:v:13:y:2006:i:1:p:129-144 DOI: 10.1080/13571510500520044

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    References listed on IDEAS

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    Cited by:

    1. Rajagopal, 2006. "Technology and Customer Value Dynamics in Banking Industry: Measuring Symbiotic Influence in Growth and Performance," Marketing Working Papers 2006-07-MKT, Tecnológico de Monterrey, Campus Ciudad de México.
    2. Rajagopal & Ananya Rajagopal, 2007. "Emerging Perspectives on Self Service Technologies in Retail Banking," Marketing Working Papers 2007-07-MKT, Tecnológico de Monterrey, Campus Ciudad de México.
    3. Hakan Güneş & Dilem Yıldırım, 2016. "Estimating Cost Efficiency of Turkish Commercial Banks under Unobserved Heterogeneity with Stochastic Frontier Models," ERC Working Papers 1603, ERC - Economic Research Center, Middle East Technical University, revised Mar 2016.

    More about this item


    Technical Change; Banking; Transition Economies; JEL Classifications: G21; D21;

    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


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