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-Bank Cost Efficiency As Distribution Dynamics: Controlling For Specialization Is Important

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  • Emili Tortosa Ausina

    (Universitat Jaume I)

Abstract

This paper analyzes the dynamics of cost efficiency scores in the Spanish banking industry during the period 1985-1995 and asks how such dynamics are influenced by specialization. Efficiency has been estimated through a nonparametric approach, and a model of distributions dynamics has been applied to assess the evolution of efficiency scores over time. Results show that efficiency at industry level (mean efficiency) has increased importantly and that, considering how the entire distribution evolves, there are some important patterns that mean and standard deviation fail in uncovering, like multi-modality. In addition, controlling for each firm¿s output mix sheds mor light on efficiency dynamics, as efficiency scores tend to become closer much faster. El presente trabajo tiene por objeto el estudio de la dinámica de los índices de eficiencia en la industria bancaria española durante el periodo 1985-1995, así como la manera en que dicha dinámica se ve condicionada por la especialización. La eficiencia se estima a través de un enfoque no paramétrico, y se aplica un modelo de dinámica de las distribuciones para valorar la evolución de los índices de eficiencia en el tiempo. Los resultados indican que la eficiencia a nivel de industria (eficiencia media) se ha incrementado y que, considerando la evolución de la totalidad de la distribución, existen patrones importantes imposibles de detectar por la media y la desviación típica, como la multi-modalidad. Asimismo, condicionar por la especialización de cada empresa arroja más luz sobre la dinámica de la eficiencia, pues los índices tienden a aproximarse entre sí más rápidamente.

Suggested Citation

  • Emili Tortosa Ausina, 1999. "-Bank Cost Efficiency As Distribution Dynamics: Controlling For Specialization Is Important," Working Papers. Serie EC 1999-15, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    • Handle: RePEc:ivi:wpasec:1999-15
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    References listed on IDEAS

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    2. Minzhi Wu & Emili Tortosa-Ausina & Paula Cruz-García, 2024. "The impact of diversification on the profitability and risk of Chinese banks: evidence from a semiparametric approach," Empirical Economics, Springer, vol. 67(6), pages 2565-2606, December.
    3. Jose Pastor & Lorenzo Serrano, 2006. "The Effect of Specialisation on Banks' Efficiency: An International Comparison," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(1), pages 125-149.
    4. Minzhi Wu & Emili Tortosa-Ausina, 2020. "Bank Diversification and Focus in Disruptive Times: China, 2007–2018," Working Papers 2020/21, Economics Department, Universitat Jaume I, Castellón (Spain).
    5. Fadzlan SUFIAN, 2009. "Analysis Of The Relevance Of Non-Traditional Activities Items Upon The Efficiency Of Chinese Banks: A Non-Stochastic Frontier DEA Approach," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 4, pages 83-102, November.

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    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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