Risk and efficiency in East Asian banks
The author uses a linear programming technique (data envelopment analysis) to estimate the inefficiencies of banks in Indonesia, the Republic of Korea, Malaysia, the Philippines, and, Thailand. He applies this technique to the pre-crisis period 1992-96. Assessing a Bank's overall performance requires assessing both efficiency and risk factors, so the author also introduces a measure of risk taking. This risk measure helps predict which banks were restructured after the crisis of 1997. The author finds that foreign-owned banks took little risk relative to other banks in East Asia, and that family-owned and company-owned banks were among the highest-risk takers. Banks restructured after the 1997 crisis had excessive credit growth, were mostly family-owned or company-owned, and were almost never foreign-owned.
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- Berger, Allen N. & Mester, Loretta J., 1997.
"Inside the black box: What explains differences in the efficiencies of financial institutions?,"
Journal of Banking & Finance,
Elsevier, vol. 21(7), pages 895-947, July.
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- Allen N. Berger & Loretta J. Mester, 1997. "Inside the Black Box: What Explains Differences in the Efficiencies of Financial Institutions?," Center for Financial Institutions Working Papers 97-04, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Allen N. Berger & Loretta J. Mester, 1997. "Inside the black box: what explains differences in the efficiencies of financial institutions?," Working Papers 97-1, Federal Reserve Bank of Philadelphia.
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- Gilbert, R. Alton & Wilson, Paul W., 1998. "Effects of Deregulation on the Productivity of Korean Banks," Journal of Economics and Business, Elsevier, vol. 50(2), pages 133-155, March.
- Jonathan Hao & William C. Hunter & Won Keun Yang, 1999. "Deregulation and efficiency: the case of private Korean banks," Working Paper Series WP-99-27, Federal Reserve Bank of Chicago.
- Bhattacharyya, Arunava & Lovell, C. A. K. & Sahay, Pankaj, 1997. "The impact of liberalization on the productive efficiency of Indian commercial banks," European Journal of Operational Research, Elsevier, vol. 98(2), pages 332-345, April.
- Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July. Full references (including those not matched with items on IDEAS)
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