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Imf Bank-Restructuring Efficiency Outcomes:Evidence From East Asia

Author

Listed:
  • MOHAMED ARIFF

    (University of Tokyo & Bond University)

  • LUC CAN

    (Boston University)

Abstract

This paper reports new findings for the first time on bank efficiency over the pre- and post-IMF-restructuring periods for East Asia using the DEA and regression models. Bank closures that followed the IMF interventions are economically justified; but mergers and acquisitions experience short-term efficiency losses. Recapitalization and then re-privatization of bad banks have led to efficiency improvements, but still increased government ownership. Ease of entry has resulted in more foreign bank participation with improved performance; further spurts in improvements, however, may take longer time. These findings advocate bank restructuring during the crisis; but well-designed measures are vital to ensure its success. Bank mergers and acquisitions need to be scrutinized. Privatization, particularly with strategic foreign ownership, of domestic banks which should be further encouraged. To reap the potential benefits of such foreign participation, stronger economic reforms of the host countries should be further pursued.

Suggested Citation

  • Mohamed Ariff & Luc Can, 2008. "Imf Bank-Restructuring Efficiency Outcomes:Evidence From East Asia," CARF F-Series CARF-F-128, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  • Handle: RePEc:cfi:fseres:cf128
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    File URL: http://www.carf.e.u-tokyo.ac.jp/pdf/workingpaper/fseries/132.pdf
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    References listed on IDEAS

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    Cited by:

    1. Parinduri, Rasyad A. & Riyanto, Yohanes E., 2012. "The Impact of the Strategic Sale of Restructured Banks: Evidence from Indonesia," World Development, Elsevier, vol. 40(3), pages 446-457.
    2. Alireza Tamadonnejad & Aisyah Abdul-Rahman & Mariani Abdul-Majid & Mansor Jusoh, 2017. "The evaluation of East Asian banks by considering economic and political conditions as well as country risk," International Economics and Economic Policy, Springer, vol. 14(1), pages 27-41, January.
    3. Stewart, Chris & Matousek, Roman & Nguyen, Thao Ngoc, 2016. "Efficiency in the Vietnamese banking system: A DEA double bootstrap approach," Research in International Business and Finance, Elsevier, vol. 36(C), pages 96-111.
    4. Barros, Carlos Pestana & Williams, Jonathan, 2013. "The random parameters stochastic frontier cost function and the effectiveness of public policy: Evidence from bank restructuring in Mexico," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 98-108.
    5. Ummad Mazhar & Ceyhun Elgin, 2013. "Environmental Regulation, Pollution and the Informal Economy," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 9, pages 62-81.
    6. Williams, Jonathan, 2012. "Efficiency and market power in Latin American banking," Journal of Financial Stability, Elsevier, vol. 8(4), pages 263-276.
    7. Manlagñit, Maria Chelo V., 2011. "Cost efficiency, determinants, and risk preferences in banking: A case of stochastic frontier analysis in the Philippines," Journal of Asian Economics, Elsevier, vol. 22(1), pages 23-35, February.
    8. Wanke, Peter & Barros, Carlos P. & Faria, João R., 2015. "Financial distress drivers in Brazilian banks: A dynamic slacks approach," European Journal of Operational Research, Elsevier, vol. 240(1), pages 258-268.
    9. Peter Wanke & Carlos Barros & Nkanga Pedro João Macanda, 2016. "Predicting Efficiency in Angolan Banks: A Two-Stage TOPSIS and Neural Networks Approach," South African Journal of Economics, Economic Society of South Africa, vol. 84(3), pages 461-483, September.
    10. Chen, Pei-Fen & Liu, Ping-Chin, 2013. "Bank ownership, performance, and the politics: Evidence from Taiwan," Economic Modelling, Elsevier, vol. 31(C), pages 578-585.
    11. George Assaf, A. & Matousek, Roman & Tsionas, Efthymios G., 2013. "Turkish bank efficiency: Bayesian estimation with undesirable outputs," Journal of Banking & Finance, Elsevier, vol. 37(2), pages 506-517.

    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
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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