What is the impact of problem loans on Japanese bank productivity growth?

Mamatzakis, Emmanuel; Matoušek, Roman; Vu, Anh Nguyet

doi:10.1111/fmii.12112

Cited by 4 publications

(8 citation statements)

References 95 publications

(207 reference statements)

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“…The impact of capitalization on efficiency is presented with mixed evidence. Conditional on a model specification, Mamatzakis et al (2019) found both positive and negative associations between capitalization and efficiency for a sample of Japanese banks. In the study of 10 European banking systems, Lozano-Vivas et al (2002) found that capital ratio is important for explaining efficiency differences for banks in the U.K. and France.…”

Section: Variables For Explaining Inefficiency In Bankingmentioning

confidence: 95%

“…The bank is viewed as a DMU which collects deposits with labor and capital and produces loans and other earning assets (Sealey Jr. and Lindley (1977)). Application examples of this approach include analysis at the bank level and can be found in Aly et al (1990), Isik and Hassan (2002), Casu et al (2013), Almanidis et al (2019), Mamatzakis et al (2019), to mention a few.…”

Section: Sensitivity To Market Riskmentioning

confidence: 99%

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Review of Modern Approaches for Assessing the Effectiveness of Banking

Леонов¹

2021

JAER

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In the current circumstances of digital transformation of the economy, the study of the efficiency of commercial banks is widely demanded and provides an opportunity for identifying the prerequisites for the formation of a sustainable financial system. Despite the large number of scientific publications in this field, there are no systematic studies that summarize the existing methodological framework for the study of the effectiveness of banking activities. The purpose of the article is to critically analyze the approaches to assessing the efficiency of banking activities and prospects for its improvement in the digital economy. The complexity of assessing the effectiveness of commercial banks consists in the multiplicity of forms of output and resources used for this process. In this study, the author puts forward a hypothesis that the implementation of modern approaches and methods to assess the effectiveness of banking activities can improve the accuracy of the assessment itself, and help identify factors that increase the effectiveness of such activities. The article is based on English-language scientific papers published in between 2016 and 2020 and indexed in the international scientometric database «Web of Science». The author applies the method of systematic bibliographic study of the set of publications, highlights the main discussion issues of the recent years, namely, research methodology, internal efficiency factors, country specifics of banking activities. The article reveals the content, certain issues, and the limits of the applicability of the nonparametric method of data envelopment analysis and the parametric method of stochastic frontier analysis in assessing the effectiveness of activities. Particular attention is paid to the generalization of research results in terms of identifying factors that have a significant impact on the effectiveness of commercial banks: ownership structure, returns to scale, regulation. The author highlights the increasing role of information technology as a key production factor, highlights the phenomenon of breaking the value chain in banking activities, the formation of new business models and the functioning of banking ecosystems. The scientific and practical significance of the article lies in the gain of knowledge, which might provide the basis for the development of measures to improve banking regulation, as well as serve as the framework for the identification of the most effective forms of banking intermediation.

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Section: Variables For Explaining Inefficiency In Bankingmentioning

confidence: 95%

Section: Sensitivity To Market Riskmentioning

confidence: 99%

Review of Modern Approaches for Assessing the Effectiveness of Banking

Леонов¹

2021

JAER

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“…For simplicity, we name these two types of problem loans as bankrupt loans (BRL) and restructured loans (RSL) thereafter. Such disaggregation of problem loans has not been employed widely in the Japanese banking productivity literature (Mamatzakis et al, 2016). This disaggregation allows us to explore the extent to which each uncontrollable input, namely bankrupt loans and restructured loans, affects bank productivity.…”

Section: Datamentioning

confidence: 99%

“…Moreover, in Japanese banking literature, bank efficiency studies have dominated the research field of bank performance, for example Drake and Hall (2003), Fukuyama and Weber (2005), Fukuyama and Weber (2010), Barros, Managi, and Matousek (2012), Yang and Morita (2013). Japanese bank productivity has been rather neglected (Assaf, Barros, & Matousek, 2011;Fukuyama, 1995;Fukuyama, Guerra, & Weber, 1999;Mamatzakis et al 2016;Mamatzakis and Koutsomanolis-Filippaki, 2009). We, thus, fill a gap in the literature and apply for the first time a productivity growth decomposition to Japanese banks, where problem loans' impact would be revealed.…”

Section: Introductionmentioning

confidence: 99%

“…We, thus, fill a gap in the literature and apply for the first time a productivity growth decomposition to Japanese banks, where problem loans' impact would be revealed. 1 Previous literature has considered nonperforming loans as uncontrollable inputs or undesirable outputs in the banking production process (Assaf, Matousek, & Tsionas, 2013;Barros et al, 2012;Drake & Hall, 2003;Fukuyama & Weber, 2008;Glass, McKillop, Quinn, & Wilson, 2014;Hughes & Mester, 2010;Mamatzakis, Matousek, & Vu, 2016;Mamatzakis and Vu 2018;Mamatzakis and Tsionas 2017). We follow Drake and Hall (2003) and Hughes and Mester (2010) to treat bankrupt and restructured loans as uncontrollable inputs in our productivity decomposition.…”

Section: Introductionmentioning

confidence: 99%

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The Interplay Between Problem Loans and Japanese Bank Productivity

Mamatzakis

Matoušek

2019

SSRN Journal

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This paper examines for the first time the impact of problem loans on Japanese productivity growth. We exploit a new data set of Japanese problem loans classified into two categories: bankrupt and restructured loans. We opt for a novel and flexible productivity growth decomposition that allows to measure the direct impact of these problem loans on productivity growth. The results reveal that Japanese bank productivity growth was severely constrained by bankrupt and restructured loans early in 2000s, whilst some persistence of the negative impact of problem loans on productivity growth is observed in the late 2000s. Thereafter, there is only some partial recovery in the productivity growth from 2012 to 2015. Further, we also perform cluster analysis to examine convergence or divergence across regions and over time. We observe limited convergence, though Regional Banks seem to form clusters in some regions.

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Economic slowdown, NPA crisis and productivity behavior of Indian banks

Goswami¹,

Gulati²

2021

IJPPM

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PurposeThis paper aims to investigate the productivity behavior of Indian banks in the presence of non-performing assets (NPAs) over the period 1999 to 2017. The study examines whether Indian banks withstand the shocks of the global financial crisis (GFC) of 2007–2009 and sustain their total factor productivity (TFP) levels in the post-crisis economic turbulent period or not.Design/methodology/approachThe robust estimates of TFP and its components: efficiency change and technical change are obtained using the state-of-the-art and innovative sequential Malmquist-Luenberger productivity index (SMLPI) approach. The key advantages of this approach are that it explicitly allows the joint production of undesirable output (NPAs in our case) along with desirable inputs and outputs in the production process and precludes the possibility of spurious technical regress.FindingsThe empirical results of the study reveal that the Indian banking system has experienced a (−1) percent TFP regress, contributed solely by efficiency loss during the period under investigation. The GFC has slowed down the growth trajectory of TFP growth in the Indian banking industry. Among ownership groups, the effect of the GFC was pronounced on the public sector banks.Practical implicationsThe practical implication drawn from the study is that the Indian banks have not been able to successfully transmit the use of installed technology in a way to generate early warning signals and mitigate the risk of defaults so as to maximize their productivity gains in the banking industry.Originality/valueThis study is perhaps the first one to understand the productivity dynamics of the Indian banks in response to both endogenous (i.e. NPA crisis) and exogenous (i.e. global financial and economic stress) crises. Moreover, the authors obtain the robust estimates of TFP growth of Indian banks by explicitly accounting for NPAs as an undesirable output and equity as a quasi-fixed input in the bank production process.

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What is the impact of problem loans on Japanese bank productivity growth?

Cited by 4 publications

References 95 publications

Review of Modern Approaches for Assessing the Effectiveness of Banking

Review of Modern Approaches for Assessing the Effectiveness of Banking

The Interplay Between Problem Loans and Japanese Bank Productivity

Economic slowdown, NPA crisis and productivity behavior of Indian banks

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