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Input inefficiency in commercial banks: a normalized quadratic input distance approach

By Thomas L. Marsh, Allen M. Featherstone and Thomas A. Garrett


A normalized quadratic input distance function is proposed with which to estimate technical efficiency on commercial banks regulated by the Federal Reserve System. The study period covers 1990 to 2000 using individual bank information from the Call and Banking Holding Company Database. A stochastic frontier model is specified to estimate the input normalized distance function and obtain measures of technical efficiency.Banks and banking

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