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Bank Size, Specialization and Efficiency in the Netherlands: 1992-1998

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  • Bos J.W.B.
  • Kool C.J.M.

    (METEOR)

Abstract

In this paper we assess cost and profit efficiency for a sample of banks operating on the Dutch banking market in the period 1992-1998, using stochastic frontier efficiency analysis. Over the entire period, the cost-efficient frontier deteriorates but mean cost efficiency and profit efficiency are relatively stable at the industry level. No evidence is found for trend changes in mean efficiency due to the previous consolidation and deregulation. However, whereas all banks appear to perform rather similarly in terms of cost efficiency, in terms of profit efficiency large general banks and specialized banks clearly outperform small, general banks. Large banks appear to benefit from sheer size and perhaps market power. This is evidence in favor of the large banks behaving collusively and capturing oligopoly rents. Specialized banks operate savely and efficiently in what might be termed a niche market.

Suggested Citation

  • Bos J.W.B. & Kool C.J.M., 2001. "Bank Size, Specialization and Efficiency in the Netherlands: 1992-1998," Research Memorandum 008, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    • Handle: RePEc:unm:umamet:2001008
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    Cited by:

    1. Dairo Estrada & Poldy Osorio, 2004. "Effects Of Financial Capital On Colombian Banking Efficiency," Revista ESPE - ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 22(47), pages 162-201, December.
    2. repec:eee:wdevel:v:107:y:2018:i:c:p:176-188 is not listed on IDEAS
    3. Fall, François & Akim, Al-mouksit & Wassongma, Harouna, 2018. "DEA and SFA research on the efficiency of microfinance institutions: A meta-analysis," World Development, Elsevier, vol. 107(C), pages 176-188.

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