Analysing the determinants of performance of best and worst European banks: A mixed logit approach

Barros, Carlos Pestana; Ferreira, Cândida; Williams, Jonathan

doi:10.1016/j.jbankfin.2006.11.010

Cited by 128 publications

(103 citation statements)

References 40 publications

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“…The main obstacles of the full integration are national economic conditions, differences in legal and fiscal system, and cultural differences, among others. Barros et al (2007) support this view in their study by showing that country-level characteristics (location and tradition), firm-level features (bank ownership, balance sheet structure and size) still matter. They also argue that smaller sized banks with higher loan intensity and foreign banks from countries with common low traditions have a higher chance of best performance.…”

Section: An Overview: European Banking System and The Global Financiamentioning

confidence: 67%

“…There has been extensive research on bank efficiency either on individual EU countries or on the group of EU countries that include 'old' EU15 and/or new EU countries, see for example, Berger, (2003), Goddard et al (2007), Barros et al (2007), Fries and Taci (2005), Casu and Girardone (2006), Chortareas et al (2012;, Matousek et al (2014), among others.…”

Section: Introductionmentioning

confidence: 99%

“…Indeed, most studies on bank efficiency discuss findings that pre-date the crisis (see Altunbas (2001), Casu and Molyneux (2003), Casu and Girardone (2006), Goddard et al (2007), Barros et al (2007), Brissimis et al (2010) among others). Our study not only addresses the above-mentioned gap but we also advance the methodological approach on how to estimate bank efficiency.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Bank efficiency, productivity, and convergence in EU countries: a weighted Russell directional distance model

Fujii

Managi

Matoušek

et al. 2017

The European Journal of Finance

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Abstract:The objective of this study is three-fold. First we estimate and analyse bank efficiency and productivity changes in the EU28 countries with the application of a novel approach, a weighted Russell directional distance model. Second, we take a disaggregated approach and analyse the contribution of the individual bank inputs on bank efficiency and productivity growth. Third, we test for convergence in EU28 bank productivity as well as in the inefficiency of individual bank inputs. We find that bank efficiency has been undermined by the financial crisis in banks notably from the EU15 countries. We also argue that bank efficiency and productivity in EU countries vary across the banking sector with banks from the 'old' EU showing higher efficiency levels. Nonetheless, a noticeable catching up process is observed for banks from the 'new' EU countries. Consequently, we do not find evidence of group convergence for bank productivity but there is evidence of convergence in bank efficiency change and technical change among the EU28 countries throughout the period 2005-2014. The driving force seems to be convergent technical change from the old EU Member States' banks.On the other hand, almost no convergence is detected for the banks' individual inputs while the transition paths show heightened diversity during the crisis years.JEL Classification: G21; D21; G23; C11

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Section: An Overview: European Banking System and The Global Financiamentioning

confidence: 67%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Bank efficiency, productivity, and convergence in EU countries: a weighted Russell directional distance model

Fujii

Managi

Matoušek

et al. 2017

The European Journal of Finance

View full text Add to dashboard Cite

show abstract

“…Moreover, some researchers have argued that big banks are in a much better position to reap economies of scale and have greater diversification opportunities. According to Barros, Ferreira, and Williams (2007), large banks were generally able to raise less expensive capital, positively affecting their profitability (Smirlock, 1985). Relatively more long-intensive and smaller banks were more likely to perform better and less likely to perform poorly, whereas bigger and more diversified banks were less likely to perform well and more likely to perform poorly.…”

Section: Bank-specific Variablesmentioning

confidence: 99%

What Determines Banks’ Profitability? Evidence from Emerging Markets—the Case of the UAE Banking Sector

Mehta¹,

Bhavani²

2017

AFR

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The primary objective of this study is to examine the variables that impact the profitability of UAE banks. The current study provides evidence of important bank-specific, macroeconomic, and industry-specific variables that have affected UAE banks' profitability by analyzing balanced panel data for 2006 to 2013. Both Islamic and non-Islamic, domestic commercial banks are considered for the purposes of this study. This paper puts into relief the determinants of the profitability of the domestic commercial banking sector of the UAE. The sample comprises 19 UAE domestic banks. The paper examines internal variables (company-level indicators), which include size, liquidity, and capital adequacy, as well as external variables, which include macroeconomic and industry-specific variables. Panel data regression analysis is used for the analysis. Based on the empirical analysis, the cost efficiency, nontraditional revenue sources, and high asset quality are the most significant bank-specific variables, and bank managers can use them to make future policy decisions. The GDP, a macroeconomic variable, is found to be relevant to the return on assets and return on equity. The model generated in the study can explain a greater than 75% change in the total variance of various measures of profitability. This paper adds to the body of knowledge by empirically highlighting the most recent and extensive panel data for the entire domestic banking sector of the UAE, undoubtedly one of the most important banking sectors in the Middle East. The paper uses a range of independent variables for the internal, macroeconomic, and industry-specific variables.

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“…For instance, Filbeck et al (2011) submitted that bank size play significant role in performance during periods of economic contraction. Barros, Ferreira and Williams (2007), further showed that small banks are more likely to perform better than their larger counterparts. Again, Pasiouras and Kosmidou (2007) also found that bank size tend to have significant impact on performance.…”

Section: Bank/industry Specific Factors Explaining Performance Variabmentioning

confidence: 96%

Exchange Rate Volatility, Global Market Exposure and Operational Efficiency among US Commercial Banks

Abaidoo¹

2014

IJEF

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This study investigates how specific macroeconomic conditions/variables influence operational efficiency dynamics among US Commercial banks at the aggregate level. Empirical approach adopted in this study examines both the short and long run effects of modeled explanatory variables on operational efficiency. Utilizing net interest margin as a proxy for operational efficiency among US commercial banks, short and long run effects of modeled macroeconomic conditions/variables on bank operational efficiency are estimated. Ensuing empirical results show that conditions such as macroeconomic uncertainty, exchange rate volatility, global market exposure etc. have significant and varying impact on operational efficiency among US commercial banks in both the short and the long run. For instance, this study finds that macroeconomic uncertainty has negative impact on operational efficiency among US commercial banks in the short run; the effect however, tends to dissipates in the long run. Test estimates further suggest that exchange rate volatility rather augments operational efficiency among these commercial banks in both the short and long run; whereas financial liberalization restricts growth in operational efficiency.

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Analysing the determinants of performance of best and worst European banks: A mixed logit approach

Cited by 128 publications

References 40 publications

Bank efficiency, productivity, and convergence in EU countries: a weighted Russell directional distance model

Bank efficiency, productivity, and convergence in EU countries: a weighted Russell directional distance model

What Determines Banks’ Profitability? Evidence from Emerging Markets—the Case of the UAE Banking Sector

Exchange Rate Volatility, Global Market Exposure and Operational Efficiency among US Commercial Banks

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