Short-Run Cost Inefficiency of Commercial Banks: A Flexible Stochastic Frontier Approach

Kaparakis, Emmanuel I.; Miller, Stephan M.; Noulas, Athanasios G.

doi:10.2307/2077953

Cited by 187 publications

(122 citation statements)

References 26 publications

Supporting

Mentioning

106

Contrasting

Unclassified

Order By: Relevance

“…Overall, the handful of studies that examine profit efficiency typically find that profit efficiency is lower than cost efficiency in banking markets. Table A4.2 in the Appendix, reviews some of the most relevant US and European studies employing stochastic cost frontiers [see also, the extensive surveys of Bauer (1990); Kaparakis et al (1994); Berger and Humphrey (1997)]. …”

Section: X-efficiency Findings By Measurement Methodsmentioning

confidence: 99%

“…Under the alternative "intermediation" approach [see, for example, Kaparakis et al (1994); Mester (1993 and; Allen and Rai (1996);Molyneux et al (1996); Berger and Mester (1997)], banks are considered as intermediaries between liability holders and those who receive bank funds, rather than producers of loan and deposit account services. As a consequence, the values of loans and other assets are defined as bank outputs, while deposits and other liabilities (capital and labour) are inputs to the production process.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Analysing the determinants of bank efficiency: the case of Italian banks

2004

View full text Add to dashboard Cite

This study investigates the main determinants of Italian banks' cost efficiency over the period 1993-1996, by employing a Fourier-flexible stochastic cost frontier in order to measure X-efficiencies and economies of scale. Quality and riskiness of bank outputs are explicitly accounted for in the cost function and their impact on cost efficiency levels is evaluated. The results show that mean X-inefficiencies range between 13 and 15 per cent of total costs and they tend to decrease over time for all bank sizes. Economies of scale appear present and significant, being especially high for popular and credit co-operative banks. Moreover, the inclusion of risk and output quality variables in the cost function seems to reduce the significance of the scale economy estimates. Following Spong et al. (1995) a profitability test is undertaken that allows for the identification of banks that are both cost and profit efficient. The results suggest that the most efficient and profitable institutions are more able to control all aspects of costs, especially labour costs. Finally, the data are pooled to carry out a logistic regression model in order to examine bank- and market-specific factors that influence Italian banks' inefficiency. Confirming Mester (1993, 1996), inefficiencies appear to be inversely correlated with capital strength and positively related to the level of non-performing loans in the balance sheet. The analysis also shows that there is no clear relationship between asset size and bank efficiency. Finally, it is possible to infer that quoted banks seem to be on average more efficient than their non-quoted counterparts.

show abstract

Section: X-efficiency Findings By Measurement Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Analysing the determinants of bank efficiency: the case of Italian banks

2004

View full text Add to dashboard Cite

show abstract

“…Kaparakis, Miller and Noulas (1994) in an analysis of commercial banks and Collins and Harris (2005) in their study of UK chemical plants both suggested that "sample selection" was a potential issue in their analysis. Neither of these formally modified their stochastic frontier models to accommodate the result, however.…”

Section: Estimating a Stochastic Frontier Model With Sample Selectionmentioning

confidence: 99%

A stochastic frontier model with correction for sample selection

2009

View full text Add to dashboard Cite

Heckman's (1979) sample selection model has been employed in three decades of applications of linear regression studies. The formal extension of the method to nonlinear models, however, is of more recent vintage. A generic solution for nonlinear models is proposed in Terza (1998). We have developed simulation based approach in Greene (2006). This paper builds on this framework to obtain a sample selection correction for the stochastic frontier model. We first show a surprisingly simple way to estimate the familiar normal-half normal stochastic frontier model (which has a closed form log likelihood) using maximum simulated likelihood. The next step is to extend the technique to a stochastic frontier model with sample selection. Here, the log likelihood does not exist in closed form, and has not previously been analyzed. We develop a simulation based estimation method for the stochastic frontier model. In an application that seems superficially obvious, the method is used to revisit the World Health Organization data [WHO (2000), Tandon et al. (2000)] where the sample partitioning is based on OECD membership. The original study pooled all 191 countries. The OECD members appear to be discretely different from the rest of the sample. We examine the difference in a sample selection framework.JEL classification: C14; C23; C25

show abstract

“…ziskovej) funkcie sa začal výraznejšie presadzovať v odbornej literatúre už v priebehu 90-tych rokov (Kaparakis, Miller, Noulas, 1994;Lang, Welzel, 1996;Berger, Leusner, Mingo, 1997 ;Berger, Mester, 1997;Adams, Berger, Sickles, 1999). Uvedení autori uplatňujú pri skúmaní nákladovej (ziskovej) efektivity tzv.…”

Section: Prehľad Literatúryunclassified

Influence of Different Ownership Forms on Efficiency of Czech and Slovak Banks: Stochastic Frontier Approach

Baruník¹,

Soták²

2010

Politicka ekonomie

View full text Add to dashboard Cite

, Ústav teorie informace a automatizace AV ČR, v. v. i., Institut ekonomických studií FSV UK, Praha; Branislav Soták, Institut ekonomických studií FSV UK, Praha* ÚvodReformu fi nančného sektoru a privatizáciu bánk v tranzitívnych krajinách popisuje množstvo empirických prác, napr. Bonin et al. (1998), Anderson et al. (1998), Khaled et al. (2003). Tieto práce sa však zaoberajú popisom procesu transformácie bánk v tranzitívnych ekonomikách obecne. V stredoeurópskom regióne je v spomínaných prácach venovaný priestor ekonomikám Poľska, Maďarska a Českej republiky, transformácia bánk v Slovenskej republike je v literatúre opomínaná.Z domácich prác je najvýznamnejším uceleným popisom transformačného procesu bankového systému v SR práca Marcinčina a Beblavého (2000). Dopĺňa príležitostné čiastkové štúdie Národnej Banky Slovenska (napr. Tkáčová, 2001;Preisinger, 2001) a Slovenskej Akadémie Vied (napr. Hlavatý, 2001). Všetky práce domácich autorov sú však len popisom reštrukturalizácie a privatizácie bánk, prípadne dielčích problé-mov bankového sektoru v SR. V odbornej literatúre chýba práca, ktorá by pomocou štandardných ekonometrických metód skúmala problematiku empirickým testovaním reálnych dát a tým doplnila existujúcu literatúru o analýzu skutočných vplyvov rôznych foriem vlastníctva bánk na výkonnosť bankového sektoru. Práve vyplnenie tejto medzery je ambíciou autorov tejto práce.V článku postupne predstavíme prehľad doterajšej literatúry, podrobne popíšeme metodológiu, testované dáta a konečne najzaujímavejšiu časť článku, výsledky empirického výskumu. Na vzorke slovenských a českých bánk budeme skúmať dopady rôznych foriem vlastníctva na nákladovú efektivitu bánk pomocou analýzy stochastických hraníc. Je nutné zdôrazniť, že práca sa zaoberá pohľadom na danú problematiku z hľadiska údajov pred vznikom fi nančnej krízy 2008, teda v období mimoriadne úspešného vývoja bankového sektoru. Prehľad literatúryV popisnej rovine je už v súčasnosti dostupných množstvo prác, ktoré sa zaoberajú reformou fi nančného prostredia v tranzitívnych ekonomikách a privatizáciou bánk ako jej podstatnou súčasťou, napr.

show abstract

Short-Run Cost Inefficiency of Commercial Banks: A Flexible Stochastic Frontier Approach

Cited by 187 publications

References 26 publications

Analysing the determinants of bank efficiency: the case of Italian banks

Analysing the determinants of bank efficiency: the case of Italian banks

A stochastic frontier model with correction for sample selection

Influence of Different Ownership Forms on Efficiency of Czech and Slovak Banks: Stochastic Frontier Approach

Contact Info

Product

Resources

About