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Effects Of Financial Capital On Colombian Banking Efficiency

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  • Dairo Estrada

    ()

  • Poldy Osorio

    ()

Abstract

In this paper we discuss cost and pro¯t e±ciency for a sample of ¯nancial institutions on the Colombian ¯nancial market in the period 1989-2003, using stochastic frontier e±ciency analysis. During the pe- riod, the cost e±cient frontier deteriorates, but pro¯t e±cient frontier is relatively stable. We found signi¯cant di®erence when we compare the e±ciency scores between types of ¯nancial intermediaries. Addi- tionally, our analysis show that the scores for pro¯t and cost e±ciency have di®erent distribution. We found big di®erences between pro¯t and cost e±ciency among the di®erent type banks. This is evidence in favor of some banks behaving collusively and capturing oligopoly rents.

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  • Dairo Estrada & Poldy Osorio, 2004. "Effects Of Financial Capital On Colombian Banking Efficiency," BORRADORES DE ECONOMIA 002432, BANCO DE LA REPÚBLICA.
  • Handle: RePEc:col:000094:002432
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    Cited by:

    1. Sarmiento, Miguel & Galán, Jorge E., 2017. "The influence of risk-taking on bank efficiency: Evidence from Colombia," Emerging Markets Review, Elsevier, vol. 32(C), pages 52-73.
    2. 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.
    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. 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.
    5. 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.
    6. 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.
    7. Diego Restrepo-Tobón & Jim Sánchez-González, 2018. "Measuring Profit Efficiency of Colombian Banks: A Composite Nonstandard Profit Function Approach," Documentos de Trabajo CIEF 016986, Universidad EAFIT.
    8. Carolina Ortega Londoño, 2018. "Transmission of Monetary Policy and Bank Heterogeneity in Colombia," Documentos de Trabajo CIEF 016792, Universidad EAFIT.
    9. Diana Fernández Moreno & Dairo Estrada, 2013. "Colombian bank efficiency and the role of market structure," Temas de Estabilidad Financiera 076, Banco de la Republica de Colombia.
    10. Carolina Ortega Londoño & Diego Restrepo, 2018. "Transmission of Monetary Policy and Bank Heterogeneity in Colombia," Documentos de Trabajo CIEF 016987, Universidad EAFIT.
    11. Javier E. Pirateque & José H. Piñeros & Linda Mondragón, 2013. "Eficiencia de los establecimientos bancarios (EB): una aproximación mediante modelos DEA," Borradores de Economia 798, Banco de la Republica de Colombia.

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    More about this item

    Keywords

    Frontier;

    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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