Cost Efficiency in Greek Banking

TThis study uses the distribution free approach to investigate cost efficiency in a panel of Greek banks over 1993-1999, a period characterized by major changes in the banking sector brought about by gradual financial deregulation. These reforms were supposed to provide an opportunity to Greek banks to improve their efficiency and to enhance their competitiveness in view of ongoing financial integration in Europe and the introduction of the euro. The results obtained indicate that important cost X-inefficiencies are in place. Some evidence is provided that bank characteristics such as bank size, type of ownership and risk behaviour do play a role in explaining differences in measured inefficiencies. Scale economies are also examined and the findings indicate that the Greek banking industry experiences economies of scale, though they have declined throughout the observed period. This suggests that competitive viability may be an important factor for further consolidation in the Greek banking industry.X-efficiency, scale economies, panel data

Information technology and cost efficiency in Malaysian banking industry

It is argued that information technology can increase cost efficiency of banks by offering opportunities to substitute across inputs into production – for example, to substitute computer technology and information networks for labor. Hence, the transition to a knowledge-based financial sector would lead to banks becoming more competitive, more cost effective and better able in managing risks. As such, those banks that failed to make this transition are less able to compete as they lack the capability to innovate and face higher delivery costs. The main objectives of this paper are to determine the impact of IT on banking efficiency and its economies of scale using a sample of Malaysian banks. To achieve these objectives, stochastic cost frontier method is employed to estimate bank efficiency and panel data approach were used to examine the impact of IT on bank efficiency. The results indicate that the impact of IT on bank efficiency increases with increase in bank size, hence further supporting the process of bank mergers that are currently undertaken in the Malaysian banking industry

Cost Efficiency Level of Rural Banks in East Java

Rural Bank (BPR) was an important part of financial service industry in Indonesia.Their pivotal role on lending to SMEs in the rural area made their existence very strategic torural development. However, due to its operational scale, rural bank charged higher interestrate than commercial bank. The study estimated the cost efficiency of rural banks usingparametric approach. The result found that rural bank efficiency was very high. The two yearcost efficiency estimated using frontier 4.1 was 95% and median was 100%. The lowest of costefficiency level was 32%. It meant cost inefficiency of the banks under investigated was around10%. The cost efficiency level in 2006 was on average 95% and the median was 100%. It meantthat 50% or more of the observation enjoyed 100% cost efficiency. The minimum was only67%. It meant they operated at very efficient level, leaving only 5% inefficiency. In 2007, adramatic change on efficiency level was going on. The average efficiency was dropped from11% to 89.9% due to increase on interest rate and price level

Measuring Cost Efficiency Of Ukrainian Banks In 2008

The paper presents the results of a stochastic frontier analysis (SFA) of cost-efficiency of Ukrainian banks. As of lack of data on the personnel costs, we had to set limits to the year of 2008 only. To modeling banking activity, we apply the intermediary approach as one of the most commonly used in literature. Considering the results of statistical tests, we chose translog functional form of cost function and half-normal distribution of random inefficiency term. As a result of the research, we found out that efficiency of Ukrainian banks varies within 0.5224 and 0.9869 with an average value of 0.8734. Having checked a range of hypotheses, we discovered insignificant distinctions among banks by their size, type of owner and location.W artykule przedstawiono wyniki stochastycznej analizy granicznej (SFA) efektywności kosztowej banków ukraińskich. Ze względu na braki w danych dotyczących kosztów personelu, analizę ograniczono do roku 2008. W modelowaniu działalności bankowej, zastosowano podejście pośrednika jako jeden z powszechnie stosowanych w literaturze. Biorąc pod uwagę wyniki testów statystycznych, wybrano funkcjonalną formę funkcji kosztów I pół-normalny rozkład losowy

Bank cost efficiency in Kazakhstan and Russia

The Kazakhstan banking system is increasingly viewed as more advanced than the Russian system. Kazakhstan adopted the International Accounting System (IAS) in 2003 and the Basel II norms in 2005, while Russia has yet to fully adopt either IAS or Basel II. In this paper, bank data for 2002-2006 are used to estimate models of bank cost efficiency. In contrast to most previous papers, no significance difference is found for the average cost efficiency scores of banks for the two countries during 2002-2006. How banks are ranked for efficiency depends upon the chosen model (input and output sets). An interesting insight is the finding that most banks in both countries are below optimal size.cost efficiency; banks; stochastic frontier approach

OPERATING COST EFFICIENCY ON PENNSYLVANIA DAIRY FARMS

Operating cost efficiency is evaluated on Pennsylvania dairy farms using a modification of the Farrell efficient unit isoquant frontier method. Evaluating farms by herd size groups, the average measure of cost efficiency ranged from 70 to 80 percent. Farms with larger herds were more homogeneous in efficiency than farms with smaller herds. Regression analysis was used to evaluate for differences in cost efficiency by herd size group.Resource /Energy Economics and Policy,

The Effects of Concentration on Competition and Efficiency : Some Evidence from the French Audit Market

This paper aims at investigating the effects of concentration on competition and cost efficiency of the French audit market. Competition is measured with the Rosse-Panzar model, while cost efficiency is estimated with stochastic frontier approach. Cost efficiency levels are estimated at around 75% with greater efficiency for Big-Four firms, while the nature of competition appears to be monopolistic competition. Dynamic analysis shows a reduction in competition, and a decrease in cost efficiency for Big-Four and non-Big-Four firms between 1999 and 2003. We therefore provide support to a negative impact of concentration on competition and cost efficiency.Auditing, audit market, competition, efficiency.

Has minority foreign investment in China�s banks improved their cost efficiency?

Since 2001, foreign investors have been permitted to acquire minority ownership stakes in China�s banks. This paper assesses whether there is any evidence of a cost efficiency payoff in those banks that have taken on foreign investment. Data Envelopment Analysis is first used to generate measures of cost efficiency for China�s banks over the period 2001-2006. A second stage regression is then performed to determine whether foreign investment has an impact on cost efficiency. The results indicate a positive impact, although one that is only marginally significant. Policy implications are discussed.

Assessing the impact of regulation on bank cost efficiency

The author finds that the bank production process was significantly distorted during a period typically associated with heavy industry regulation. As deregulation occurred, banks fully exploited the cost advantages associated with size and reaped significant gains from technological change. Efficiency significantly improved with deregulation.Banks and banking - Costs ; Bank supervision