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Large banks' efficiency in the single European market

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  • Barbara Casu
  • Claudia Girardone

Abstract

This paper examines cost and profit efficiency of large banking firms by defining a common European frontier over the period immediately following the completion of the Single Market Programme in 1992. Despite a slight increase in cost efficiency, country-specific characteristics appear to play important roles in the explanation of cost efficiency scores and significant differences, including varying competitive conditions, seem to exist across European banking markets. In contrast, results derived from the estimation of an alternative profit function seem to suggest that the efficiency gap among countries decreased substantially over the years under study.

Suggested Citation

  • Barbara Casu & Claudia Girardone, 2004. "Large banks' efficiency in the single European market," The Service Industries Journal, Taylor & Francis Journals, vol. 24(6), pages 129-142, November.
  • Handle: RePEc:taf:servic:v:24:y:2004:i:6:p:129-142
    DOI: 10.1080/0264206042000299211
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    References listed on IDEAS

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    1. Berger, Allen N. & Mester, Loretta J., 1997. "Inside the black box: What explains differences in the efficiencies of financial institutions?," Journal of Banking & Finance, Elsevier, vol. 21(7), pages 895-947, July.
    2. Agnes A Belaisch & Joaquim Vieira Ferreira Levy & Laura E. Kodres & Angel J. Ubide, 2001. "Euro-Area Banking At the Crossroads," IMF Working Papers 01/28, International Monetary Fund.
    3. Fried, Harold O. & Lovell, C. A. Knox & Schmidt, Shelton S. (ed.), 1993. "The Measurement of Productive Efficiency: Techniques and Applications," OUP Catalogue, Oxford University Press, number 9780195072181.
    4. Allen N. Berger & Loretta J. Mester, 1997. "Efficiency and productivity change in the U.S. commercial banking industry: a comparison of the 1980s and 1990s," Working Papers 97-5, Federal Reserve Bank of Philadelphia.
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    Citations

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    Cited by:

    1. Aiello, Francesco & Bonanno, Graziella, 2014. "On the Sources of Heterogeneity in Banking Efficiency Literature," MPRA Paper 58591, University Library of Munich, Germany.
    2. Anastasia Koutsomanoli-Filippaki & Dimitris Margaritis & Christos Staikouras, 2012. "Profit efficiency in the European Union banking industry: a directional technology distance function approach," Journal of Productivity Analysis, Springer, vol. 37(3), pages 277-293, June.
    3. Anastasia Koutsomanoli-Filippaki & Emmanuel Mamatzakis, 2013. "How labour market regulation shapes bank performance in EU-15 countries?," Working Papers 162, Bank of Greece.
    4. Lee, Chi-Chuan & Huang, Tai-Hsin, 2017. "Cost efficiency and technological gap in Western European banks: A stochastic metafrontier analysis," International Review of Economics & Finance, Elsevier, vol. 48(C), pages 161-178.
    5. Dan Luo & Shujie Yao, "undated". "World Financial Crisis and the Rise of Chinese Commercial Banks," Discussion Papers 09/08, University of Nottingham, GEP.
    6. Mamatzakis, E & Koutsomanoli, A, 2009. "European Banking Integration under a Quadratic Loss Function," MPRA Paper 19379, University Library of Munich, Germany.

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