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Sizing up performance measures in the financial services sector


  • J.A. Bikker


The adequate performance of banks, insurers and pension funds is of crucial importance to their private and business customers. The prices and quality of financial products sold by such entities are largely determined by operational efficiency and the degree of competition in the markets concerned. Since efficiency and competition cannot be observed directly, various indirect measures in the form of simple indicators or more complex models have been devised and used both in economic theory and in business practice. This paper demonstrates that measuring the performance of financial institutions is no simple matter and that indicators differ strongly in quality. It investigates which methods are to be preferred and how by combining certain indicators stronger measures may be developed. These measures are then subjected to a predictive validity test.

Suggested Citation

  • J.A. Bikker, 2008. "Sizing up performance measures in the financial services sector," Working Papers 08-36, Utrecht School of Economics.
  • Handle: RePEc:use:tkiwps:0836

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    References listed on IDEAS

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    7. John J. DiIulio, 1996. "Help Wanted: Economists, Crime and Public Policy," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 3-24, Winter.
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    9. B. Unger & J. Ferwerda, 2008. "Regulating Money Laundering and Tax Havens: The Role of Blacklisting," Working Papers 08-12, Utrecht School of Economics.
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    More about this item


    concentration; competition; costs; efficiency; performance; profits; banks; insurance firms; pension funds; predictive validity test;

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