Risk, Competition and Efficiency in the Chinese Banking Industry: Evidence from Stochastic Frontier Analysis and Three-Stage Least Square Estimator

2016 ◽  
Author(s):  
Yong Tan
Keyword(s):  
Stochastic Frontier Analysis ◽  
Banking Industry ◽  
Stochastic Frontier ◽  
Least Square ◽  
Least Square Estimator ◽  
Frontier Analysis ◽  
Chinese Banking Industry ◽  
Chinese Banking

scholarly journals TECHNICAL EFFICIENCY ANALYSIS IN INDONESIAN FISHERY PROCESSING INDUSTRY: A CASE OF FISHERY CANNED PRODUCT FIRMS

2019 ◽  
Vol 9 (1) ◽  
pp. 53
Author(s):  
Munawar Asikin ◽  
Arief Daryanto ◽  
Machfud . ◽  
Subagio Dwijosumono
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Efficiency Analysis ◽  
Least Square ◽  
Time Varying ◽  
Efficient Manner ◽  
Processing Industry ◽  
Frontier Analysis ◽  
Ordinary Least Square

This study aims to analyze technical efficiency and evaluate the effect of some sources of inefficiency in the Indonesian fishery canned firms during the period of 1990-2015. We calculate technical efficiency using the Stochastic Frontier Analysis (SFA) method with Time Varying Decay. The average of technical efficiency in this industry during the period of 1990-2015 was only 57%. It indicates that firms in this industry still encounter a problem in allocating the resources in efficient manner.  However, during the period of 1994-2015, the efficiency in the Indonesian fishery canned industry has declined. We also employed the Ordinary Least Square (OLS) method to evaluate the sources of inefficiency. The results showed that eight variables affected to the efficiency in this industry, thereby it will reduce fishery product competitiveness in the future

scholarly journals Risk, competition, efficiency and its interrelationships: evidence from the Chinese banking industry

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yong Tan ◽  
Vincent Charles ◽  
Doha Belimam ◽  
Shabbir Dastgir
Keyword(s):  
Credit Risk ◽  
Banking Sector ◽  
Banking Industry ◽  
Bank Competition ◽  
Content Type ◽  
Frontier Analysis ◽  
Different Types ◽  
Chinese Banking Industry ◽  
The Impact ◽  
Chinese Banking

PurposeThis study investigates the interrelationships between efficiency, competition and risk in the Chinese banking industry.Design/methodology/approachParametric stochastic frontier analysis is used to estimate bank efficiency; the Lerner index is used as the competition indicator; accounting ratios and a translog function are used to measure different types of risk and finally, the three-stage least square estimator is used to investigate the interrelationships.FindingsThe results of this study show that the impact of competition on different types of risk is significant and positive, while there is a significant and positive impact of credit risk, liquidity risk and capital risk on bank competition. In addition, the findings demonstrate that the interrelationships between efficiency and competition are significant and negative. The authors do not find any robust interrelationships between different types of risk and different types of efficiency; the authors find that diversification and higher levels of profitability reduce bank credit risk. The results suggest that a higher developed banking sector reduces the level of bank competition in China.Originality/valueThis is the first piece of research that comprehensively investigates the interrelationships between different types of risk, competition and different efficiencies in China.

scholarly journals Ownership Structure and Efficiency of Banking Industry in China and Vietnam - A Political View

2018 ◽  
Vol 9 (3) ◽  
pp. 61 ◽  
Author(s):  
Manh-Trung Phung ◽  
Cheng-Ping Cheng ◽  
Chen-Yu Kao
Keyword(s):  
Financial Institutions ◽  
Ownership Structure ◽  
Stochastic Frontier Analysis ◽  
Banking Industry ◽  
Stochastic Frontier ◽  
Two Stage ◽  
Interesting Phenomenon ◽  
Political Factors ◽  
Frontier Analysis ◽  
Political View

Ownership structure and the performance of banking industry have been long considered as a matter of debate. Despite of differences in perspective, both “development view” and “politics view” approve the desire of governments to control financial institutions through their ownership structure. This paper adopts the two-stage stochastic frontier analysis (SFA) to examine the relation between ownership structure and bank’s efficiency in two long historic communism countries – China and Vietnam with the consideration of some political factors. Our result consistently indicates that banks with foreign-controlled shareholders in both countries can increase their efficiency significantly. Additionally, we uncover an interesting phenomenon that is during the election years, state-owned banks in China and Vietnam outperform the others. These banks are also the most beneficiaries from the economic expansion. Finally, meta-frontier is utilized to compare the relative performance of banking industry in these two countries.

scholarly journals Analysis of Banking Industry Performance Efficiency in Indonesia Using Parametric and Nonparametric Methods

The Winners ◽  
2018 ◽  
Vol 19 (1) ◽  
pp. 53
Author(s):  
Banon Amelda ◽  
Erna Bernadetta Sitanggang
Keyword(s):  
Cross Section ◽  
Stochastic Frontier Analysis ◽  
Banking Industry ◽  
Stock Exchange ◽  
Parametric Method ◽  
Stochastic Frontier ◽  
Nonparametric Methods ◽  
Frontier Analysis ◽  
Efficient Performance ◽  
High Efficient

This research aimed to measure the efficiency performance of the banking industry in Indonesia by using parametric and nonparametric methods, as measured by the stabilization of bank performance efficiency based on the time series from year to year and to identify which variables to the value of efficiency. The analytical method applied the parametric method with cross section approach of Stochastic Frontier Analysis (SFA) while for nonparametric method used intermediation approach from Data Development Analysis (DEA) CRS and VRS model. The data of this research was the financial statements of banks listed on the stock exchange for the period 2012-2016 with 29 databanks processed with the help of Stata 12. From the results of the analysis using the three measures of efficiency, it is known that the efficiency value with Cross Section Stochastic Frontier Analysis shows a stable and high efficient conditions for all banks. While nonparametric methods show different efficiency levels for each bank, which with DEA CRS model not all banks show an efficient performance, only 26,90% on average each year banks have efficient performance, and 99,31% of banks perform efficiently according to VRS model. 

scholarly journals Determinants and Potential of Agri-Food Trade Using the Stochastic Frontier Gravity Model: Empirical Evidence From Nigeria

SAGE Open ◽  
2021 ◽  
Vol 11 (4) ◽  
pp. 215824402110657
Author(s):  
Nazir Muhammad Abdullahi ◽  
Xuexi Huo ◽  
Qiangqiang Zhang ◽  
Aminah Bolanle Azeez
Keyword(s):  
Gravity Model ◽  
Fixed Effects ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Least Square ◽  
Trade Expansion ◽  
Frontier Analysis ◽  
Food Trade ◽  
The Face ◽  
The Usa

Considering the importance of agri-food exports for Nigeria in the face of dwindling revenue from its oil exports. Therefore, this study provides empirical insights on the determinants and potential of agri-food exports from Nigeria to 70 major trading countries between 1995 and 2019 by applying a Stochastic Frontier Analysis (SFA) on a gravity model. We also estimate a variety of techniques, including the fixed effects, Ordinary Least Square (OLS), Pseudo Poisson Maximum Likelihood (PPML), and Heckman models to confirm the robustness of our results. We show that the economic size (GDP) of Nigeria and its trading countries, importers’ population, EU membership, ECOWAS membership and contiguity stimulate agri-food export. Also, we show that bilateral distance, domestic population, exchange rate, language, and landlocked adversely affect agri-food exports. The potential for agri-food trade expansion exists with mostly world biggest economies (including China, the USA, Brazil, India, Russia, Japan, and EU countries) and Nigeria’s border countries. Policy directions for agri-food export expansion are provided.

scholarly journals Stability and profitability in the Chinese banking industry: evidence from an auto-regressive-distributed linear specification

2016 ◽  
Vol 13 (4) ◽  
pp. 120-129 ◽  
Author(s):  
Yong Tan ◽  
John Anchor
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Banking Industry ◽  
Generalized Method Of Moments ◽  
Least Square ◽  
System Gmm ◽  
Auto Regressive ◽  
The Government ◽  
Chinese Banking Industry ◽  
Chinese Banking

The important role played by the Chinese commercial banks in the development of China’s economy has made the government and banking regulatory authority concerned about the performance of these banks.Indeedthe stability of the banking sector has attracted greater attention since the financial crisis of 2007-2009. The principal objective of this study is to investigate the inter-relationships between profitability and stability in the Chinese banking industry. Using a sample of Chinese commercial banks over the period 2003-2013, the study examines the inter-relationships under an auto-regressive-distributed linear model. Both Z-score and stability inefficiency were used as measures of stability, while Return on Assets (ROA) was used as the indicator of profitability. Different types of Generalized Method of Moments (GMM) estimators including difference GMM, one-step system GMM, two-step system GMM as well as two-step robust GMM were used. In order to the check the robustness of the results, alternative econometric techniques were used, such as ordinary least square (OLS) estimator, between effect estimator, as well as fixed effect estimator. The results show that higher insolvency risk/lower bank stability leads to higher profitability of Chinese commercial banks and also that higher profitability leads to higher bank fragility. Keywords: bank profitability, bank risk, China. JEL classification: G21, C23

Cost Efficiency Analysis in the Banking Industry

2020 ◽  
Vol 7 (2) ◽  
pp. 1-20
Author(s):  
Gazmend Nure
Keyword(s):  
Cost Efficiency ◽  
Commercial Banks ◽  
Stochastic Frontier Analysis ◽  
Banking Industry ◽  
Stochastic Frontier ◽  
Efficiency Analysis ◽  
Frontier Analysis ◽  
Relative Lack ◽  
Boundary Model ◽  
The Stability

The efficiency of commercial banks is essential for the stability of banks by implying that banks that take higher risks are more inefficient. This paper builds on a stochastic heteroscedastic boundary model, where one will analyze a sample of 70 banks in Western Balkan countries such as Albania, Northern Macedonia, Serbia, Kosovo, and Montenegro for the period 2007-2017, highlighting determinants of bank cost efficiency. Banks with less liquidity, with a lower solvency rate and a higher credit risk, are more ineffective than prudent credit institutions. The paper also aims to address the relative lack of studies on the efficiency of banks in the region through the use of the stochastic frontier analysis (SFA).

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