A Comparative Study of Efficiency in European Banking

The structure of European banking markets has substantially changed over the past decade, partially as a result of the creation of the Single Internal Market. The process of integration and accompanying deregulation has embodied an incentive for bank management to focus on improving efficiency, especially given the more competitive banking environment. In this paper, employing the non-parametric DEA approach, we investigate whether the productive efficiency of European banking systems has improved and converged towards a common European frontier between 1993 and 1997, following the process of EU legislative harmonisation. We also examine the determinants of European bank efficiency using a Tobit regression model approach. We then extend the established literature on the determinants bank efficiency by taking into account the problem of the inherent dependency of DEA efficiency scores when used in regression analysis. To overcome the dependency problem a bootstrapping technique is applied. Overall, the results suggest that since the EU's Single Market Programme there has been a small improvement in bank efficiency levels, although there is little evidence to suggest that these have converged. Efficiency differences across European banking markets appear to be mainly determined by country-specific factors.Efficiency, DEA, Bootstrap, European Banks.

Deregulation and productivity growth: a study of Indian commercial banking

This paper examines the impact of regulatory reform on the performance of Indian commercial banks. Using a balanced panel data set covering from the beginning of the deregulation period (1992) to the most recent years (2004) and employing a DEA-based Malmquist index of total factor productivity change, this paper attempts to quantify the magnitude of total factor productivity change and identify its main sources. We also explore whether deregulation has had a different impact on the performance of public, private and foreign banks and whether it affected the risk-taking behaviour of market participants. The empirical results seem to indicate that, after an initial adjustment phase, the Indian banking industry experienced sustained productivity growth, driven mainly by technological progress. Banks’ ownership structure seems to have an impact on bank efficiency but does not appear to have an influence on total factor productivity change. Although ownership per se does not seem to matter as much as increased competition, during the deregulation process foreign banks appear to have acted as technological innovators, thereby increasing even further the competitive pressure in the Indian banking market. Finally, our results also indicate an increase in risk-taking behaviour along with the whole deregulation process.Deregulation; Indian banking; Productivity Change; Malmquist Index

Towards a new model for early warning signals for systemic financial fragility and near crises: an application to OECD countries

Using a signal extraction framework and looking at OECD countries over a 30 year period this paper attempts to identify a number of variables significant in predicting near-crises as a pre-cursor to full-fledged crises. These include growth in pension assets as an indicator for the development of liquidity bubbles, equity market dividend yields as a proxy for corporate balance sheet health, banking sector assets growth and relative size to GDP. We also study the development of asset price bubbles through an equity markets indicator and a house price indicator. Finally we also look at a banking sector funding stability indicator and liquidity indicator on a micro-level. Simultaneously, a dynamic research design improves on previous static set-ups and enhances the model predictive power and applicability to different time periods. This paper shows that as early as 2004, clear signals were being given for a number of countries that vulnerabilities were building up with out-of-sample performance better than in-sample in terms of overall noise to signal ratios, showing a significant improvement compared to earlier work. EWS design has significant implications for financial stability and financial regulation.financial crises, financial fragility, liquidity bubbles, early warning signals, financial stability, financial regulation

Retained Interests in Securitisations and Implications for Bank Solvency

Using US bank holding company data for the period 2001 to 2007, this paper examines the relationship between banks' retained interests in securitisations and insolvency risk. We find that the provision of credit enhancements and guarantees significantly increases bank insolvency risk, albeit this varies for different levels of securitisation outstanding. Specifically, retained interests increase insolvency risk for ?large-scale? securitisers while having a risk-reducing effect for ?small-scale? and/or first-time securitisers. In addition, we find that the type of facility provided has implications for bank risk, with those with the most subordinated (first-loss) position having the greater impact on banks' default risk. Finally, we find that engagement in third-party securitisations has no significant effect on bank risk

Competition issues in European banking

Purpose - The purpose of this paper is to assess the outcome of European Union (EU) deregulation and competition policies on the competitive conditions of the main EU banking markets. Design/methodology/approach - After a review of deregulation and competitition policies in the EU banking industry, the degree of competition in the largest five EU banking markets using is tessted both structural (concentration ratios and Herfindahl-Hirshman indices) and non-structural (H-statistics and Lerner index) approaches. Findings - Results indicate that EU banking markets are becoming progressively more concentrated and that there is no evidence of an increase in competitive pressure. Country differences are also apparent thereby indicating that despite the sustained regulatory interventions, significant barriers to the integration of EU retail banking markets remain. In line with recent literature, the analysis also seems to provide further evidence that concentration is not necessarily a good proxy for competition. Originality/value - Increased market concentration and its effects on competition are of relevance in a period of renewed EU regulatory efforts to remove the remaining barriers to the integration of financial markets. The evaluation of competitive conditions and market power in EU banking are therefore of interest to policy-makers and regulators. © Emerald Group Publishing Limited

Influence of the Ryukyu Kingdom\u27s State Religion on the Rituals for Visiting Deities as performed in the Rural Areas : Focussing on the Northern Ryukyuan Cultural Sphere

博士(学術)法政大学 (Hosei University

Towards a new model for early warning signals for systemic financial fragility and near crises: an application to OECD countries

Using a signal extraction framework and looking at OECD countries over a 30 year period this paper attempts to identify a number of variables significant in predicting near-crises as a pre-cursor to full-fledged crises. These include growth in pension assets as an indicator for the development of liquidity bubbles, equity market dividend yields as a proxy for corporate balance sheet health, banking sector assets growth and relative size to GDP. We also study the development of asset price bubbles through an equity markets indicator and a house price indicator. Finally we also look at a banking sector funding stability indicator and liquidity indicator on a micro-level. Simultaneously, a dynamic research design improves on previous static set-ups and enhances the model predictive power and applicability to different time periods. This paper shows that as early as 2004, clear signals were being given for a number of countries that vulnerabilities were building up with out-of-sample performance better than in-sample in terms of overall noise to signal ratios, showing a significant improvement compared to earlier work. EWS design has significant implications for financial stability and financial regulation

Towards a new model for early warning signals for systemic financial fragility and near crises: an application to OECD countries

Using a signal extraction framework and looking at OECD countries over a 30 year period this paper attempts to identify a number of variables significant in predicting near-crises as a pre-cursor to full-fledged crises. These include growth in pension assets as an indicator for the development of liquidity bubbles, equity market dividend yields as a proxy for corporate balance sheet health, banking sector assets growth and relative size to GDP. We also study the development of asset price bubbles through an equity markets indicator and a house price indicator. Finally we also look at a banking sector funding stability indicator and liquidity indicator on a micro-level. Simultaneously, a dynamic research design improves on previous static set-ups and enhances the model predictive power and applicability to different time periods. This paper shows that as early as 2004, clear signals were being given for a number of countries that vulnerabilities were building up with out-of-sample performance better than in-sample in terms of overall noise to signal ratios, showing a significant improvement compared to earlier work. EWS design has significant implications for financial stability and financial regulation