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The impact of transformation on economic efficiency – a case study of financial holding companies in Taiwan

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  • Ming-Tse Wu

Abstract

The present study examines the question of whether the transformation of Taiwan's banks into financial holding companies (FHCs) has led to an improvement in operating efficiency. The results indicate that while comparison of FHCs and banks shows that FHCs are significantly more efficient than non-FHC banks, if the comparison is made in terms of efficiency before and after conversion to FHC status, then no significant increase in total factor productivity (TFP) is seen after conversion to FHC status. The study's results indicate that while the transformation of some Taiwanese banks into FHCs has made these banks more competitive vis-à-vis other, non-FHC banks, the conversion to FHC status has not made any significant contribution towards these banks’ own efficiency growth. Government should keep encouraging the conversion of FHC banks, and, furthermore, stimulate the FHC banks on financial reform and overseas market expansion in order to elevate the efficiency of Taiwan financial industry.

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  • Ming-Tse Wu, 2015. "The impact of transformation on economic efficiency – a case study of financial holding companies in Taiwan," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 20(3), pages 465-488, July.
    • Handle: RePEc:taf:rjapxx:v:20:y:2015:i:3:p:465-488
    DOI: 10.1080/13547860.2015.1054170
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    Cited by:

    1. Li‐Ting Yeh & Dong‐Shang Chang & Huei‐Min Li, 2022. "Developing a network data envelopment analysis model to measure the efficiency of banking with the governance, innovation, and operations," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2863-2874, October.
    2. Tai-Hsin Huang & Yi-Chun Lin & Kuo-Jui Huang & Yu-Wei Liao, 2022. "Comparing Cost Efficiency Between Financial and Non-financial Holding Banks and Insurers in Taiwan Under the Framework of Copula Methods and Metafrontier," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 29(4), pages 735-766, December.

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