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A Geographically Weighted Approach in Measuring Efficiency in Panel Data: the Case of US Saving Banks

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  • Benjamin M. Tabak
  • Rogério B. Miranda
  • Dimas M. Fazio

Abstract

The objective of this article is to discuss a new approach to control for the environment when one estimates efficiency by the stochastic frontier model. By introducing geographical weights and estimating local frontiers for each US saving bank for 2001-09, we find that bank technical performance is higher for most banks in comparison to a fixed-effects approach. This result highlights the importance of explicitly considering local environment and constraints while analyzing banks' behavior. All in all, this model has been proved very promising and viable for future empirical studies.

Suggested Citation

  • Benjamin M. Tabak & Rogério B. Miranda & Dimas M. Fazio, 2012. "A Geographically Weighted Approach in Measuring Efficiency in Panel Data: the Case of US Saving Banks," Working Papers Series 275, Central Bank of Brazil, Research Department.
  • Handle: RePEc:bcb:wpaper:275
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    References listed on IDEAS

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    Cited by:

    1. Shiyi Chen & Wolfgang K. Härdle & Li Wang, 2014. "Estimation and Determinants of Chinese Banks’ Total Factor Efficiency: A New Vision Based on Unbalanced Development of Chinese Banks and Their Overall Risk," SFB 649 Discussion Papers SFB649DP2014-068, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    2. Bruno Martins, 2012. "Local Market Structure and Bank Competition: evidence from the Brazilian auto loan market," Working Papers Series 299, Central Bank of Brazil, Research Department.
    3. repec:taf:oaefxx:v:3:y:2015:i:1:p:1006976 is not listed on IDEAS
    4. Angelo Marsiglia Fasolo, 2012. "A Note on Particle Filters Applied to DSGE Models," Working Papers Series 281, Central Bank of Brazil, Research Department.
    5. Waldyr Areosa & Marta Areosa, 2012. "Information (in) Chains: information transmission through production chains," Working Papers Series 286, Central Bank of Brazil, Research Department.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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