Cost efficiency of banks in transition: Evidence from 289 banks in 15 post-communist countries

Fries, Steven; Taci, Anita

doi:10.1016/j.jbankfin.2004.06.016

Cited by 692 publications

(553 citation statements)

References 21 publications

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“…In accordance with recent developments in literature (Fries and Taci 2005;Pereraet al 2007;Mamatzakiset al 2008;Srairi, 2010) and in order to capture the heterogeneity among countries, the cost in this study function is extended to adapt to country-specific variables:…”

Section: 1-efficiency Scoresmentioning

confidence: 99%

“…We use the same measures as in previous studies (Fries and Taci, 2005;Carvalo and Kasman, 2005;Pareraet al, 2007;Srairi, 2010):…”

Section: 2-macroeconomic Variablesmentioning

confidence: 99%

“…The first group calculates scores of cost and profit efficiency using the SFA. Some researches calculate only scores of cost efficiency: Staikouras et al (2008), Koutsomanoli-Filippaki et al (2009) and Fries and Taci (2005). Somme studies calculates both scores of cost and profit efficiency: Berger and Mester (1997) found a positive relationship between the ratio of capital adequacy and cost efficiency.…”

Section: Introductionmentioning

confidence: 99%

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The Determinants of Cost/Profit Efficiency of Islamic Banks Before, During and After the Subprime Crisis Using SFA Approach

Mghaieth

Khanchel

2015

ijafr

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In this paper we estimate the determinants of cost and profit efficiency of Islamic banks using the stochastic frontier approach SFA. We use 62 Islamic banks in sixteen countries of the MENA and South-East Asia regions during the period [2004][2005][2006][2007][2008][2009][2010]. We compare the efficiency between Islamic banks during the subprime crisis phases. Moreover, we examine the variables specific to the banks which can explain the sources of inefficiency and those let us decline the scores of cost and profit efficiency on a specific number of variables (total assets, capital adequacy, profitability, credit risk, operational costs). Results reveal that, Islamic banks in our study are more efficient in the generation of the profits rather than in the control of the costs. Thus, only the total assets and the operational costs represent the determinants of cost efficiency of the Islamic banks. Finally, for the profit efficiency our results indicate that the Islamic banks with high equities and high ratio of profitability are efficient in terms of profit.

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Section: 1-efficiency Scoresmentioning

confidence: 99%

“…We use the same measures as in previous studies (Fries and Taci, 2005;Carvalo and Kasman, 2005;Pareraet al, 2007;Srairi, 2010):…”

Section: 2-macroeconomic Variablesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The Determinants of Cost/Profit Efficiency of Islamic Banks Before, During and After the Subprime Crisis Using SFA Approach

Mghaieth

Khanchel

2015

ijafr

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“…In the intermediation approach, outputs are considered as 'banking activities that produce a flow of banking services connected to labour or physical capital expenditure' (Fries & Taci 2005, p. 55-81). Elyasiani & Mehdian (1990) argue that the intermediation approach is more inclusive of total banking costs because the interest expenses associated with deposits are not excluded.…”

Section: Datamentioning

confidence: 99%

Technical Efficiency Levels of Rural Banks (BPRs) in West Java: A Stochastic Frontier Approach

Natih

2015

ECON FINANC INDONES

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There is considerable evidence from around the world to support the idea that access to formal financial services is a key factor towards achieving poverty alleviation. The government of Indonesia has placed high importance on the issue of improved access to financial services and one feels that it would be appropriate to begin the process of analyzing effective financial inclusion initiatives with the existing Bank Perkreditan Rakyat (BPR) system. BPRs have long been an integral part of Indonesia's financial, economic, and social development. This research is focused on BPRs in West Java. In this research, the writer evaluates BPR performance within twenty-five districts in West Java, by measuring the technical efficiency levels of the BPRs through employing the Stochastic Frontier Approach (SFA). The district that has the highest BPR average inefficiency score is Bandung city and the district with the lowest average BPR inefficiency score is the district of Ciamis. Increases in bank concentration (indicated by the Hirschman-Herfindahl Index) and income per capita are shown to decrease BPR inefficiency levels. Increases in the percentage of the population under the poverty line, the percentage of the labor force with a high school education, the percentage of road length per area, and the amount of bank offices per district, increase the inefficiency levels of BPRs. Overall, it is found that BPRs cannot operate efficiently in areas which are too underdeveloped; neither can they operate efficiently in areas which are too well developed. Keywords: Bank Perkreditan Rakyat (BPR); West Java; Technical Efficiency; Stochastic Frontier Approach (SFA) AbstrakTerdapat bukti substantif pengalaman berbagai negara di dunia bahwa akses pada jasa finansial formal adalah faktor kunci dalam upaya pengentasan kemiskinan. Pemerintah Republik Indonesia telah menempatkan upaya peningkatan mutu dan akses jasa finansial bagi masyarakat Indonesia, sebagai salah satu kebijakan utama dalam pengentasan kemiskinan. Tulisan ini bertujuan untuk membahas dan menganalisa efektivitas badan-badan penyedia jasa finansial di Indonesia, sebagai starting-point dengan memulai analisa efektivitas jasa finansial yang diberikan oleh Bank Perkreditan Rakyat (BPR). Penelitian ini difokuskan kepada BPR di Jawa Barat. Penulis mengevaluasi performa BPR pada 25 kabupaten/kota di Jawa Barat, dengan mengukur tingkat efisiensi teknis melalui metode Stochastic Frontier Approach (SFA). Kota tempat BPR yang memiliki rata-rata in-efisiensi tertinggi adalah Kota Bandung dan Kabupaten dengan in-efisiensi rata-rata BPR-nya yang terendah adalah Kabupaten Ciamis. Peningkatan dalam konsentrasi perbankan di sebuah kabupaten/kota (terindikasi Hirschman-Herfindahl Index) dan peningkatan pendapatan per kapita pada kabupaten/kota tersebut terbukti menurunkan tingkat inefisiensi BPR. Sebagai kesimpulan utama, ditemukan bahwa BPR tidak dapat beroperasi secara efektif pada area yang sangat underdeveloped dan juga tidak dapat beroperasi efektif pada area yang sangat devel...

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“…It has been widely used to estimate technical inefficiencies of production of firms; see for example, the monographs by Kumbhakar and Lovell (2003) and Coelli et al (2005). It also has been used in studies of corporate financial decision and bank efficiency; see for example, Hunt-McCool et al (1996), Baek (2004), Fries and Taci (2005), Lensink et al (2008), and Kauko (2009).…”

Section: Introductionmentioning

confidence: 99%

Assessing bankruptcy prediction models via information content of technical inefficiency

et al. 2011

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We use a stochastic frontier model with firmspecific technical inefficiency effects in a panel framework (Battese and Coelli in Empir Econ 20:325-332, 1995) to assess two popular probability of bankruptcy (PB) measures based on Merton model (Merton in J Financ 29:449-470, 1974) and discrete-time hazard model (DHM; Shumway in J Bus 74: 2001). Three important results based on our empirical studies are obtained. First, a firm with a higher PB generally has less technical efficiency. Second, for an ex-post bankrupt firm, its PB tends to increase and its technical efficiency of production tends to decrease, as the time to its bankruptcy draws near. Finally, the information content about firm's technical inefficiency provided by PB based on DHM is significantly more than that based on Merton model. By the last result and the fact that economic-based efficiency measures are reasonable indicators of the long-term health and prospects of firms (Baek and Pagán in Q J Bus Econ 41:27-41, 2002), we conclude that PB based on DHM is a better credit risk proxy of firms.

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Cost efficiency of banks in transition: Evidence from 289 banks in 15 post-communist countries

Cited by 692 publications

References 21 publications

The Determinants of Cost/Profit Efficiency of Islamic Banks Before, During and After the Subprime Crisis Using SFA Approach

The Determinants of Cost/Profit Efficiency of Islamic Banks Before, During and After the Subprime Crisis Using SFA Approach

Technical Efficiency Levels of Rural Banks (BPRs) in West Java: A Stochastic Frontier Approach

Assessing bankruptcy prediction models via information content of technical inefficiency

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