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Effects of Financial Capital on Colombian Banking Efficiency

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Listed author(s):
  • Dairo Estrada

    ()

  • Poldy Osorio

    ()

Abstract

In this paper we discuss cost and profit efficiency for a sample of financial institutions on the Colombian financial market in the period 1989-2003, using stochastic frontier efficiency analysis. During the period, the cost efficient frontier deteriorates, but profit efficient frontier is relatively stable. We found significant difference when we compare the efficiency scores between types of financial intermediaries. Additionally, our analysis show that the scores for profit and cost efficiency have different distribution. We found big differences between profit and cost efficiency among the different type banks. This is evidence in favor of some banks behaving collusively and capturing oligopoly rents.

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Paper provided by Banco de la Republica de Colombia in its series Borradores de Economia with number 292.

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Date of creation: Jun 2004
Handle: RePEc:bdr:borrec:292
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Keywords: Frontier; Effficiency; Cost; Profit; Financial Capital;

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Find related papers by JEL classification:
  • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
  • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
  • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
  • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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Cited by:

  1. Miguel SARMIENTOÕ & Andrés CEPEDA & Hernando MUTIS & Juan F. PÉREZ, 2013. "Nueva Evidencia sobre la Eficiencia de la Banca," ARCHIVOS DE ECONOMÍA 010705, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
  2. Barrientos Marín, Jorge & Tobón, David & Gutiérrez, Alderid, 2009. "Producción y eficiencia estocástica: una aplicación a la industria del calzado en Colombia," REVISTA LECTURAS DE ECONOMÍA, UNIVERSIDAD DE ANTIOQUIA - CIE, July.
  3. Dairo Estrada & Angela González Arbeláez & Javier Gutierréz Rueda, 2008. "The Effects of Diversification on Banks´ Expected Returns," BORRADORES DE ECONOMIA 004991, BANCO DE LA REPÚBLICA.
  4. Alejandro Ramírez Vigoya, 2015. "Ajuste de una función de producción al sector financiero en Colombia," REVISTA FACULTAD DE CIENCIAS ECONÓMICAS, UNIVERSIDAD MILITAR NUEVA GRANADA, vol. 0(1), pages 141-156, June.
  5. Miguel Sarmiento & Jorge E. Galán, 2015. "The influence of risk-taking on bank efficiency: evidence from Colombia," Working Papers 1537, Banco de España;Working Papers Homepage.
  6. Javier E. Pirateque & José H. Piñeros & Linda Mondragón, 2013. "Eficiencia de los establecimientos bancarios (EB): una aproximación mediante modelos DEA," BORRADORES DE ECONOMIA 011103, BANCO DE LA REPÚBLICA.
  7. Diana Fernández Moreno & Dairo Estrada, "undated". "Colombian bank efficiency and the role of market structure," Temas de Estabilidad Financiera 076, Banco de la Republica de Colombia.
  8. Jorge David Quinteo Otero & William Orlando Prieto Bustos & Fernando Barrios Aguirre & Laura Elena Leviller Guardo, 2008. "Determinantes de la eficiencia técnica en las empresas colombianas, 2001-2004," REVISTA SEMESTRE ECONÓMICO, UNIVERSIDAD DE MEDELLÍN, November.
  9. Galán, Jorge E. & Sarmiento, Miguel, 2014. "Heterogeneous effects of risk-taking on bank efficiency : a stochastic frontier model with random coefficients," DES - Working Papers. Statistics and Econometrics. WS ws142013, Universidad Carlos III de Madrid. Departamento de Estadística.
  10. Carlos Andrés Amaya G., 2005. "Interest Rate Setting And The Colombian Monetary Transmission Mechanism," BORRADORES DE ECONOMIA 002910, BANCO DE LA REPÚBLICA.
  11. Carlos Andrés Amaya, 2005. "Interest Rate Setting and the Colombian Monetary Transmission Mechanism," Borradores de Economia 352, Banco de la Republica de Colombia.

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