Opening the Black Box on Bank Efficiency in China: Does Economic Freedom Matter?

Abstract

The paper provides, for the first time, empirical evidence on the impact of economic freedom on bank efficiency in a developing economy. We employ the Data Envelopment Analysis method to compute the efficiency of the Chinese banking sector during 2000Á2008. The empirical findings indicate that the inefficiency of the Chinese banking sector stems largely from scale rather than pure technical. By examining different dimensions of economic freedom, we find that not all are equally regressive on bank efficiency. We find that the impact of business freedom to be positive, implying that higher (lower) freedom for entrepreneurs to start businesses increases (reduces) bank efficiency. Similarly, monetary freedom is positively related to bank efficiency levels, indicating the importance of a stable and reliable monetary policy to business environment. On the other hand, the impact of financial freedom is negative, implying that higher (lower) financial freedom reduces (increases) the efficiency of banks operating in the Chinese banking sector.

Estimating the Economic Determinants of Technical Efficiency of Bioenergy in EU-28: An Application of Tobit Analysis

“…In consistent with previous study Alsaleh et al (2017) (Berndes et al, 2009;Sufian and Habibullah, 2011;Meriküll et al, 2012). The EU-28 zone can react variously to the exact TE factors because of the various terms impact (Nielsen, 2011 sufficient to provide privilege, like raised bio-energy generation product, characteristics and more advantages from various sources of traditional energy aligned with an earlier paper (Scarlat et al, 2013).…”

“…;Färe and Lovell (1978);Gumbau-Albert and Maudos (1996);Hawdon (2003);Lovell (1993);Perelman (1995);Ramanathan (1999);Sun et al (2015);Tugcu (2013);Winkler (2003);Yudistira (2004);Sufian and Habibullah (2011) investigated the impact of macroeconomic and microeconomic factors on efficiency level in the developing and developed economy Sufian and Habibullah (2011). applied a DEA data envelopment analysis mathematical approach to compute the TE of the industry in Republic of China during the period 2000 and 2008.…”

Independence and Architecture of Financial Supervision: With Focus on the Effects on Banking Stability

“…Only a few studies, such as Dincer and Eichengreen (2012), Masciandaro et al (2013), have separately examined the effects of limited aspects of architecture as well as the governance characteristics. See Sufian and Habibullah (2011) for the summary of the literature on the importance of the banking sector for the economy. 2.…”

Market Concentration, Risk-taking, and Efficiency of Commercial Banks in Pakistan: An Application of the Two-Stage Double Bootstrap DEA

“…Moradi-Motlagh and Babacan (2015) substantiated that DEA is a powerful methodology for the benchmarking of efficiencies across a range of different industries, sectors, portfolios, nations, and other economic entities. An important advantage is that DEA does not require any specific functions and therefore it is preferred by researchers (Hou et al, 2014;Lu, Chiu, Shyu, & Lee, 2013;Moradi-Motlagh & Babacan, 2015;Sufian & Habibullah, 2011).…”

“…In this context, the bank's main function is to facilitate depositors by taking their savings and facilitate borrowers by providing loans and credits. The study uses deposits, fixed assets, number of employees, and general and administrative expenses as input variables while total loans, investments, interest/profit, and other incomes are the output variables (Berger & Hannan, 1998;Berger & Humphrey, 1997;Luo, Yao, Chen, & Wang, 2011;Sufian, 2009;Sufian & Habibullah, 2011;Sun & Chang, 2011). The explanatory variable market concentration is represented by the Herfindahl-Hirschman Index (HHI) in deposits (Berger & Humphrey, 1997;Fu & Heffernan, 2009;Pan, 2005), while the study evaluates four types of risks: capital risk, credit risk, liquidity risks, and overall risk (Zhang et al, 2013).…”