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Effects of consolidation of cooperative financial institutions in Japan: Evidence from meta‐frontier analysis

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  • Nobuyoshi Yamori
  • Kozo Harimaya

Abstract

This study investigates the regional differences in how consolidation has affected the efficiency of Shinkin banks, a representative cooperative financial institution in Japan, using the stochastic meta‐frontier approach based on cost and profit functions. The findings support the quiet life hypothesis that a significant negative relationship exists between efficiency‐adjusted Lerner indices and cost efficiency. By contrast, the relation between market power and profit efficiency is consistently positive. Moreover, independent Shinkin banks not involved in mergers exhibit higher costs and profit efficiency than other banks, suggesting that mergers can deteriorate efficiency.

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  • Nobuyoshi Yamori & Kozo Harimaya, 2024. "Effects of consolidation of cooperative financial institutions in Japan: Evidence from meta‐frontier analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 867-886, January.
    • Handle: RePEc:wly:ijfiec:v:29:y:2024:i:1:p:867-886
    DOI: 10.1002/ijfe.2711
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