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Economic Efficiency and Value Maximization in Banking Firms

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  • Fernández, Ana Isabel
  • Gascón, Fernando
  • González , Eduardo

Abstract

We study economic efficiency in 142 financial intermediaries from eighteen countries over the period 1989-1998 and the relationship between efficiency, productivity change and shareholders’ wealth maximization. A non-parametric frontier analysis (DEA) is applied to estimate the relative efficiency of commercial banks of different geographical areas. A Malmquist decomposition is then carried out in order to separate efficiency change from technical change. We evaluate the relationship between economic efficiency and wealth maximization. Results show different productivity patterns among three geographical areas (North America, Japan and Europe) over the sample period. The estimates of economic efficiency and productivity changes are consistent with the wealth maximization criterion.

Suggested Citation

  • Fernández, Ana Isabel & Gascón, Fernando & González , Eduardo, 2001. "Economic Efficiency and Value Maximization in Banking Firms," Efficiency Series Papers 2001/11, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
  • Handle: RePEc:oeg:wpaper:2001/11
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    References listed on IDEAS

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    Cited by:

    1. Sergio Destefanis & Vania Sena, 2007. "Patterns of corporate governance and technical efficiency in Italian manufacturing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 27-40.

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