The Cost Efficiency of German Banks: A Comparison of Sfa and DEA

Koetter, Michael; Karmann, Alexander; Fiorentino, Elisabetta

doi:10.2139/ssrn.2793983

Cited by 23 publications

(11 citation statements)

References 19 publications

(35 reference statements)

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“…This study made observations in 2012 -2018. This is supported by the ability of the SFA method to explain changes from time to time, not just technical matters (Fiorentino et al, 2006).…”

Section: Analysis and Discussionmentioning

confidence: 93%

Analysis of the effect of bank size, credit risk, and capital adequacy on cost efficiency of banks in Indonesia (SFA method)

Nainggolan

Sari

Wasiaturrahma

2022

jeb

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Many banks are competing to achieve bank cost efficiency for business continuity amidst the competition in the banking sector. So banks need to review cost-efficiency regularly. The purpose of this study was to analyze determinants of bank cost efficiency. Variable use bank size, capital adequacy, return on asset, group of the bank, credit risk, economic growth, and inflation on bank cost efficiency in Indonesia. Determination of bank input and output variables using a bank intermediation approach. This study used panel data on 38 banks in Indonesia for the period 2012-2018. This paper used the Stochastic Frontier Analysis (SFA) analysis method. The results of this study reveal four things. First, bank size has a negative effect bank cost efficiency. Second, credit risk has a positive effect on bank cost efficiency. Third, capital adequacy has a positive effect on bank efficiency. Fourth, the small core capital bank group has a negative effect on bank cost efficiency. Bank external variables do not affect bank cost efficiency in Indonesia.

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“…This study made observations in 2012 -2018. This is supported by the ability of the SFA method to explain changes from time to time, not just technical matters (Fiorentino et al, 2006).…”

Section: Analysis and Discussionmentioning

confidence: 93%

Analysis of the effect of bank size, credit risk, and capital adequacy on cost efficiency of banks in Indonesia (SFA method)

Nainggolan

Sari

Wasiaturrahma

2022

jeb

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“…Data Envelopment Analysis (DEA) procedure is a widely used nonparametric technique to estimate innovation efficiency (Charnes et al 1978). DEA is selected in this study because it is more sensitive to sample heterogeneity (Fiorentino et al, 2006). This sample heterogeneity has generally been found using samples from the Chinese manufacturing sector (Abraham and Konings, 2010).…”

Section: Methodsmentioning

confidence: 99%

Accelerating Innovation Efficiency through Agile Leadership: The CEO Network Effects in China

Chen

Tee

Chang

2022

Technological Forecasting and Social Change

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“…Sherman and Gold (1985) used labor, rental expense and supply costs as inputs, following the DEA method. Fiorentino et al (2006), in their analysis of the efficiency of German banks consider deposits as inputs.…”

Section: The Choice Of Imputs Outputs and Explanatory Factorsmentioning

confidence: 99%

Impact of main idiosyncratic and exogenous factors on cost Efficiency: The case of MENA banking industries – SFA approach

Rizk¹

2022

FMIR

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This study explores the impact of main idiosyncratic endogenous (Capital ratio, Diversification, Liquidity, Return on equity (ROE), Banks assets’ size) and macroeconomic exogenous (Inflation rate, GDP growth rate and HHI concentration index) determinants of the banking firm that influence banks’ cost efficiency. Using the SFA (Stochastic Frontier Approach) we estimate cost efficiency of the MENA banking sectors through a two-stage model: i) Including idiosyncratic and macroeconomic factors at a first stage under SFAW (SFA With) and ii) excluding these factors under SFAWO (SFA without) at a second stage. By using this method, SFAW versus SFAWO, we compare between the efficiency frontiers and scores obtained and understand the effect of the integration of main determinants on efficiency of banks in the MENA region. Using a sample of 240 observations for MENA banks collected from 18 banking sectors, we analyze whether these criteria had impact on cost efficiency throughout 1999-2017. We find that SFAW scores of efficiency are higher than SFAWO. Furthermore, our results show clearly the impact of determinants selected on cost efficiency frontier. Finally, notwithstanding ongoing fundamental changes in MENA’s banking industries, the empirical results, show that these inefficiencies can be explained by the idiosyncratic factors (Assets ‘size, liquidity, profitability, etc.) which are under the control of bank managers and the macroeconomic environment (economic growth, inflation) which largely depends on the economic, monetary and financial policies adopted in each country of the MENA region.

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The Cost Efficiency of German Banks: A Comparison of Sfa and DEA

Cited by 23 publications

References 19 publications

Analysis of the effect of bank size, credit risk, and capital adequacy on cost efficiency of banks in Indonesia (SFA method)

Analysis of the effect of bank size, credit risk, and capital adequacy on cost efficiency of banks in Indonesia (SFA method)

Accelerating Innovation Efficiency through Agile Leadership: The CEO Network Effects in China

Impact of main idiosyncratic and exogenous factors on cost Efficiency: The case of MENA banking industries – SFA approach

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