The impact of deregulation and re-regulation on bank efficiency: evidence from Asia

Following the 1997 crisis, banking sector reforms in Asia have been characterised by the emphasis on prudential regulation, associated with increased financial liberalisation. Using a panel data set of commercial banks from eight major Asian economies over the period 2001-2010, this study explores how the coexistence of liberalisation and prudential regulation affects banks’ cost characteristics. Given the presence of heterogeneity of technologies across countries, we use a stochastic frontier approach followed by the estimation of a deterministic meta-frontier to provide ‘true’ estimates of bank cost efficiency measures. Our results show that the liberalization of bank interest rates and the increase in foreign banks' presence have had a positive and significant impact on technological progress and cost efficiency. On the other hand, we find that prudential regulation might adversely affect bank cost performance. When designing an optimal regulatory framework, policy makers should combine policies which aim to foster financial stability without hindering financial intermediation

Adoption of rice cultivation technologies and its effect on technical efficiency in Sagnarigu District of Ghana

This study examined the adoption of rice cultivation technologies on farmers’ technical efficiency in Sagnarigu District. The stochastic frontier model was used to estimate the determinants of output and technical inefficiency while propensity score matching was also used to analyse the average treatment effect (ATE) and the average treatment effect on the treated (ATT). A total of 120 respondents comprising 60 adopters and 60 non-adopters were randomly selected from six communities in the District and interviewed using semi-structured questionnaires. Farm size, fertilizer, weedicides and household labour had positive and significant effect on rice output. Farmers who adopted the rice cultivation techniques were less technically inefficient than those who did not adopt. The ATT was 0.121 which implies that farmers who adopted the rice technologies increased their technical efficiency by about 12% and this was significant at 10% for the PSM with similar results obtained for the nearest neighbour matching. The ATE value of 0.102 which was also statistically significant at 10% means that farmers on the whole increased their technical efficiency by 10.2%. Moreover, the mean technical efficiency estimates for adopters and non-adopters were about 58% and 48% respectively under regression adjustment and inverse-probability weights. The existence of a technical efficiency gap of 10% between adopters and non-adopters of rice technologies emphasized the significant effect of technology adoption on farmer’s technical efficiency. The study recommends that more rice farmers should be encouraged to adopt the rice production technologies in order to improve their technical efficiency levels