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Bank efficiency studies on emerging markets tend to show that foreign banks are more cost‐, profit‐, and operationally efficient than statE‐owned or domestic private banks. They also show that large banks are more efficient than small banks. Using a parametric approach to measuring efficiency, this article finds that foreign banks servicing foreign and business customers are more cost‐efficient and less profit‐efficient than other banks in Poland. Additionally, evidence of cost economies and profit diseconomies of scale are found. These results have implications for regulatory policies focused on promoting efficiency in the banking systems of emerging markets.

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This paper identifies a monetary policy channel through the risk pricing of bank debt in the market for jumbo certificates of deposit (jumbo CDs). Adverse policy shocks increase debt holder perceptions of bank default, increasing the risk premia for some banks, thereby decreasing their external funding of loans. The results show that contractionary policy increases the sensitivity of jumbo‐CD spreads to leverage and asset risk for small banks, and to leverage for large banks. The results also show a distributional and aggregate effect on banking system jumbo CDs and total loans, producing a risk‐pricing (or market discipline) channel. This channel has implications for monetary and regulatory policies, and financial stability.