Cost Efficiency of the Banking Sector in Vietnam: A Bayesian Stochastic Frontier Approach with Regularity Constraints

2010 ◽  
Vol 24 (2) ◽  
pp. 115-139 ◽  
Author(s):  
Ha Thu Vu ◽  
Sean Turnell
Keyword(s):  
Cost Efficiency ◽  
Banking Sector ◽  
Stochastic Frontier ◽  
Stochastic Frontier Approach

scholarly journals Mergers decision in Japanese small mutual banks: efficiency improvement or empire buildings?

2009 ◽  
Vol 7 (2) ◽  
pp. 117-125 ◽  
Author(s):  
Nobuyoshi Yamori ◽  
Kozo Harimaya
Keyword(s):  
Cost Efficiency ◽  
Stochastic Frontier ◽  
Efficiency Improvement ◽  
Important Goal ◽  
Stochastic Frontier Approach ◽  
Credit Associations ◽  
Bank Managers ◽  
The World ◽  
Mutual Banks ◽  
Credit Association

With the number of bank consolidations increasing around the world since the 1990s, several studies have examined what factors drive banks to consolidate, and some argue that bank managers who have a motive of empire buildings choose mergers. In this study, we deal with mergers among Japanese small mutual banks (credit associations or Shinkin banks) during the period 1996 to 2005. Japanese credit associations have been experiencing an unprecedented wave of consolidation, with their number decreasing from 410 (March 1996) to 292 (April 2006). Interestingly, unlike stock companies, mutual companies are often expected to be weak in terms of disciplining managers. If so, mutual banks tend to choose inefficient mergers at the expense of other stakeholders. Here, we use the stochastic frontier approach (SFA) to obtain “cost efficiency” proxy. We find that while the efficiency of acquiring credit associations decreases during the merger period, mergers do ultimately improve efficiency. Based on our results we find that raising efficiency, not for building empires, is an important goal for such credit association mergers.

scholarly journals PANEL STOCHASTIC FRONTIER ANALYSIS OF PROFITABILITY AND EFFICIENCY OF TURKISH BANKING SECTOR IN THE POST CRISIS ERA / TURKIJOS BANKŲ SEKTORIAUS VEIKLOS PELNINGUMO IR EFEKTYVUMO ANALIZĖ POKRIZINIU LAIKOTARPIU

2011 ◽  
Vol 12 (4) ◽  
pp. 629-654 ◽  
Author(s):  
Ahmet Faruk Aysan ◽  
Mustafa Mete Karakaya ◽  
Metin Uyanik
Keyword(s):  
Structural Changes ◽  
Banking Sector ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Foreign Banks ◽  
Efficiency Gain ◽  
Stochastic Frontier Approach ◽  
Banking Efficiency ◽  
Frontier Analysis ◽  
Efficiency Measures

This paper examines the efficiency and its relation to profitability in Turkish banking sector by employing Panel Stochastic Frontier Approach. In the post crises period, extensive structural changes have taken place and a great number of new developments have occurred, affecting the efficiency of banking sector. This is the first study that employs panel stochastic frontier approach for banking efficiency in Turkey. In this research, both cost and profit efficiency measures are estimated for the panel data consisting of 32 banks between 2002–2007. Results suggest that there is cost efficiency gain and convergence in the efficiency levels of banks. As another interesting result, foreign banks are less efficient and state banks are more efficient. This paper also analyzes the relation between efficiency and profitability and finds no robust relation between them. However, the bank size matters more for profitability. Santrauka Autoriai nagrinėja Turkijos bankų veiklą, t. y. jų pelningumą bei efektyvumą pokriziniu laikotarpiu. Šis laikotarpis buvo pasirinktas todėl, kad atsirado daug įvairių struktūrinių pokyčių, kurie turėjo įtakos bankininkystės sektoriaus efektyvumui. Tyrimui buvo pasirinkti 32 Turkijoje veikiantys bankai (jų veiklos rodikliai prieš ekonominę krizę ir po jos). Rezultatai rodo, kad Turkijoje veikiančių užsienio komercinių bankų veikla yra mažiau efektyvesnė nei valstybinių. Taip pat autoriai analizuoja bankų veiklos efektyvumo ir pelningumo santykį, tačiau, kaip rodo gauti rezultatai, stipraus ryšio tarp jų nėra.

scholarly journals THE EFFECTS OF COMPETITION ON EFFICIENCY: THE VIETNAMESE BANKING INDUSTRY EXPERIENCE

2017 ◽  
pp. 1-30 ◽  
Author(s):  
THANH PHAM THIEN NGUYEN ◽  
SON HONG NGHIEM
Keyword(s):  
Cost Efficiency ◽  
Banking Sector ◽  
Stochastic Frontier Analysis ◽  
Global Financial Crisis ◽  
Stochastic Frontier ◽  
Bank Efficiency ◽  
Frontier Analysis ◽  
The Cost ◽  
Efficiency Effects ◽  
Industry Experience

Given considerable changes in the Vietnamese banking environment brought about by significant reforms towards liberalization during the last two decades, this study investigates the evolution of competition and efficiency, compares the competition and efficiency of state-owned banks to joint-stock banks, and then tests the “quiet life” hypothesis in this industry over the period 2000–2014. This study employs the efficiency-adjusted Lerner index (i.e., market power) to capture competition, and the cost efficiency estimated by a Fourier-flexible function stochastic frontier analysis (SFA) to capture bank efficiency. This study firstly finds a slight improvement of competition and cost efficiency in the Vietnamese banking sector over the analysis period. Secondly, there are no significant differences in competition and cost efficiency level between state-owned and joint-stock banks. Thirdly, a positive causality running from competition to cost efficiency is documented, providing evidence of supporting the “quiet life” hypothesis. Finally, positive efficiency effects of the banks’ capital ratio and size are found, while insignificant impacts of the growth of GDP per capita and 2007 global financial crisis were observed. The results are strongly robust to a variety of tests. The findings suggest pro-competition, pro-capitalization and pro-size expansion policies in the Vietnamese banking sector if targeting at improving the cost efficiency of Vietnamese banks.

scholarly journals Using Environmental, Social, Governance (ESG) and Financial Indicators to Measure Bank Cost Efficiency in Asia

2021 ◽  
Vol 13 (20) ◽  
pp. 11139
Author(s):  
Hai-Yen Chang ◽  
Lien-Wen Liang ◽  
Yu-Luan Liu
Keyword(s):  
Cost Efficiency ◽  
Banking Sector ◽  
Stochastic Frontier Analysis ◽  
Developing Economies ◽  
Stochastic Frontier ◽  
Financial Indicators ◽  
Frontier Analysis ◽  
Asian Economies ◽  
Cost Efficient ◽  
The Impact

Environmental, social, and governance (ESG) practices have been used as non-financial indicators to measure bank performance worldwide in the last decade. The United Nations (UN) has specified 17 Sustainable Development Goals (SDGs) for the implementation of these ESG concepts. However, it remains unclear whether the costs of ESG have exceeded the benefits. The purpose of this study is to examine the impact of ESG on the cost efficiency of developed and developing Asian banks using a two-step approach comprising stochastic frontier analysis (SFA) and stochastic metafrontier analysis (SMF). The data sample from 2015 to 2018 is separated into two groups: 60 Asian developed economies and 85 developing economies. The results show that banks in the developed Asian economies become more cost-efficient through environmentally friendly activities. The banks in the developing Asian economies increase their cost efficiency by socially responsible activities and improved governance. Moreover, banks in the developed Asian economies outperformed those in the developing Asian economies in terms of technology gap ratio (TGR) and metafrontier cost efficiency (MCE). The results of this study benefit not only investors and bank managers but also the entire banking sector and the world economy.

Productivity and Efficiency of Banking Sector in Nepal

2019 ◽  
Vol 3 (ii) ◽  
Author(s):  
Kishor Hakuduwal
Keyword(s):  
Panel Data ◽  
Human Resource ◽  
Banking Sector ◽  
Joint Venture ◽  
Stochastic Frontier ◽  
Stochastic Frontier Approach ◽  
Policy Makers ◽  
Systematic Random Sampling ◽  
Resource Cost ◽  
Input Variables

The paper aims to analyze the productivity and efficiency of banking sector in Nepal. Using systematic random sampling, 20 banks including both commercial and development are selected. The 180 observations of nine year’s panel data from FY 2006/07 to FY 2014/15 has been used. Stochastic Frontier Approach is used taking three input variables i.e. capital, deposit and human resource cost, and one output variable i.e. loans and advance of sampled banks for analysis. The study found that the productivity of human resource, deposit and capital is significant. The joint venture banks are the most efficient than private and Government owned banks. The commercial banks are more efficient than development banks. The study has important implications for the policy makers to take corrective actions for improving the productivity and efficiency of banking sector in Nepal. Keywords: Productivity, Efficiency, Stochastic Frontier approach, Panel data, Banking sector

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