THE TECHNICAL INEFFICIENCY EFFECTS OF TURKISH BANKS AFTER FINANCIAL LIBERALIZATION

The banking sector in Turkey has grown significantly over the last two decades of financial liberalization. One of the aims of the financial liberalization was to improve efficiency through restructuring programs including the privatization of state banks and the encouragement of mergers. In this paper we identify key factors determining the technical efficiency differentials among Turkish commercial banks in the pre‐ and post‐liberalization periods, using the technical inefficiency effects model. We found that loan quality, size, ownership of the banks, and profitability have a positive and significant impact on the technical efficiencies of banks. The results warrant implementation of effective regulatory measures to improve the quality of the earning assets of commercial banks. Furthermore, steps by the government to encourage acquisitions or mergers for private banks and the privatization of state‐owned banks seem to be consistent in improving the overall efficiency of commercial banking in Turkey.     

Cost efficiency,economies of scale,technological progress and productivity in Indonesian banks

This study estimates cost efficiency, economies of scale, technological progress, and productivity growth among Indonesian banks from 1993 to 2000. Average cost efficiency for the banking sector over this period was 70%. However, there is a marked difference in cost efficiency before and after the Asian economic crisis. The banking sector cost efficiency was 80% prior to the crisis and 53% after the crisis. Moreover, results indicate that private-owned banks and joint venture/foreign banks were more efficient than public-owned banks. Furthermore, the relationship between cost efficiency and total assets suggests an optimum bank asset size. Cost reductions attributed to technological progress and economies of scale were greater prior to the Asian economic crisis. Larger decreases in total factor productivity are evident in the post-crisis period.     

EXPLAINING THE MARKET POWER OF GHANAIAN BANKS1

A competitive banking system helps lower transaction costs and risks. It also helps make financial markets more efficient. In Ghana however, observers believe that the banking industry is not competitive and point to the huge spread between bank lending and borrowing rates as evidence. The Ghanaian banking industry is analysed for evidence of market power by computing the Lerner Index of banks using quarterly data from 2001 to 2006. The evidence is that Ghanaian banks possess market power. Factors that significantly explain the market power of Ghanaian banks are: bank size, efficiency of banks with respect to staff costs, the macroeconomic environment and time.     

What Drives Cost Efficiency of Banks in China?

This study uses stochastic frontier analysis to examine the factors that influenced cost efficiency of banks in China from 2005 to 2013. The results indicate that policy variables, such as the reserve requirement ratio, the interest rate spread and open market operations by the People's Bank of China, are effective in improving the cost efficiency of banks, but shadow banking variables may reduce cost efficiency. Among the various bank types, city commercial banks appear to be the most efficient and foreign banks are the least efficient. The present study suggests that policy‐makers can have a positive influence on bank cost efficiency by adjusting macro policy variables on different types of banks and by requiring more information on the shadow banking activities to improve monitoring.     

Competitiveness and Efficiency of the Banking Sector and Economic Growth in Egypt

Abstract: This paper investigates the impact of financial reforms on competitiveness and production efficiency of the banking sector, as well as the short‐term and long‐term impact on economic growth, in Egypt during 1992–2007. The results suggest that the reforms have a positive and significant effect on competitiveness and production efficiency. Also, the evidence shows that state‐owned banks are generally less competitive than private banks and foreign banks are less competitive than domestic banks. The average x‐inefficiency of Egyptian banks is around 30 per cent, which is comparable to those reported for other African countries. Finally, there is evidence to suggest a significant relationship between financial bank productive efficiency and economic growth in the short run but not in the long run. Overall, the results support the argument for continuing the financial sector reform programme in Egypt.     

ATM Fees at Black and Hispanic Owned Single Market Banks: A Comparative Analysis

This paper presents evidence regarding three types of ATM fees: foreign fees charged for use of a non-bank ATM by the bank’s customers, surcharges for use of bank ATMs by non-customers, and balance inquiry charges for the bank’s own customers. It is hypothesized that, among single market banks, fees will be positively correlated with bank size, a lack of market competition, market penetration by multimarket banks, banks serving low income communities, and Black owned banks (BOBs) and Hispanic owned banks (HOBs), although banks may try to confuse depositors with fees that exhibit a low correlation, or may set low surcharges as part of a loss leader strategy. A 2013 sample of approximately 1500 single market banks, including 21 Black owned banks (BOBs) and 19 Hispanic owned banks (HOBs) is used for correlation and regression analyses. It is found that BOBs charge an average of $0.50 higher foreign fees, and are more likely to charge balance inquiry fees. We also find that larger banks tend to charge higher fees, and that banks may set higher fees where they serve disadvantaged communities of color. Surprisingly, market competition is never significantly associated with ATM fees, and there is minimal correlation across fees, and both results are consistent with banks setting fees strategically to confuse customers.     

我国商业银行全要素生产率实证研究:1996-2012——基于无导向型DEA-Malmquist指数模型

文章通过构建无导向型DEA-Malmquist指数模型,对我国商业银行的全要素生产率进行了评估。结果显示:1996-2012年,我国银行业的全要素生产率有所提升,但提升速度较慢;已有的银行业改革虽有效果却不够深入;较高的进入壁垒、过严的业务监管以及单一的股权结构是我国银行业效率低下的主要根源。因此,应继续推进并深化银行业改革,降低银行业的进入门槛,放宽银行业的业务管制,丰富商业银行的股权结构,促进金融资源配置效率的不断提高。     

技术进步、规模效应与银行效率变化

本文采用MalmquistTFP指数法,对国内主要商业银行1995—2008年全要素生产率（TFP）进行测算和分解,考察国内银行业改革发展过程中技术进步、规模效应与银行效率变化之间的关系。经验结果显示,1996—2002年期间国内商业银行垒要素生产率呈现衰退状况,其中技术变动指数和规模效率变动指数总体下降,可能在于这段时期内宏观经济环境及调控政策的变动。2003—2008年期间全要素生产率呈现总体好转,主要来源于技术进步及规模效率改善,国有银行股份制改造、加入WTO开放银行业等一系列制度变革举措产生了重要的促进作用;股份制银行的金要素生产率变化指数总体高于国有银行,主要得益于其技术进步的作用。国有银行的规模效率变化指数相对较高,因而在技术效率改进方面表现更佳,充分体现其规模优势。     

Does Property Rights Reform Improve the Efficiency of China＇s State-owned Banks？

China ＂s state-owned banks have undergone radical changes over the past two decades, including partial privatization and listing in both the Hong Kong Stock Exchange and the Shanghai Stock Exchange. This paper evaluates the effects of these changes by analyzing the efficiency of Chinese banks over the period 1998-2012 using two frontier techniques and comparative analysis. The findings suggest that the performance and technical efficiency of the Big Four banks improved considerably after property rights reform, but this improvement is not sufficient to keep the banks at the production frontier. Tobit regressions confirm that static ownership effects are negative but that the property rights reform has had significant and positive effects on the technical efficiency of state-owned commercial banks. GDP growth and the financial crisis have had positive effects on the efficiency of Chinese banks, which is more significant for joint stock commercial banks than state-owned commercial banks. The results indicate the value of ownership reforms of state-owned asset management companies and insurance companies and the establishment of a countercyclical capital buffer.     

Zombie firms and economic stagnation in Japan

It is often claimed that one contributing factor to Japan's weak economic performance over the past decade is that Japanese banks have continued to provide financial support for highly inefficient, debt-ridden companies, commonly referred to as ‘zombie’ firms. Such poor banking practices in turn prevent more productive companies from gaining market share, strangling a potentially important source of productivity gains for the overall economy. To explore further the zombie-firm hypothesis, we use industry- and firm-level Japanese data and find evidence that productivity growth is low in industries reputed to have heavy concentrations of zombie firms. We also find that the reallocation of market share is going in the wrong direction in these industries, adding to already weak productivity performance. In addition, we find evidence that financial support from Japanese banks may have played a role in sustaining this perverse reallocation of market share.

Do NBFCs propagate real shocks?

Notwithstanding a smaller share of total loans vis-à-vis commercial banks, we investigate a possible role of Non-banking financial companies (NBFCs) in propagating a real shock to the rest of the economy. Our two-sector model captures emerging economy characteristics such as NBFC borrowings from commercial banks, heterogeneities in financial constraints, and labour market friction faced by firms. Our theoretical and simulation results, using Indian parameters, indicate that an idiosyncratic shock (i.e., higher realization of the failed firms) and a sectoral productivity shock (in the sector financed by NBFCs) increase the interest rate charged by the banks, and the unemployment rate while reducing the real wages and per capita capital formation. However, the reverse happens given a structural shock, assumed as an increase in the average number of failed firms. Early detection of such shocks and quick policy intervention are required to provide a cushion for capital formation and job creation.     

Efficiency of the Banking Industry Structure in Korea*

This paper analyzes whether the efficiency of the Korean banking industry has improved since the bank restructuring in 1997, and whether a bank with high efficiency has a larger market share. This paper uses an efficient structure hypothesis model to examine the relationship between the banks' efficiencies and their profitability. The data envelopment analysis method is applied to measure the efficiency and profitability of the banking industry in order to minimize possible bias due to the inflow of public funds for the bank consolidation. The two‐step Heckman selection method is used to correct for survivorship bias in the model. The derived result indicates that banks with higher efficiencies tend to record higher profit. Moreover, higher pure technological efficiency and scale efficiency have a positive effect on a bank's market share and concentration.     

中国外资银行服务贸易自由化的经济影响研究——基于可计算一般均衡SIC-GE模型的定量分析

本文利用2005～2009年以来我国逐渐取消外资银行进入壁垒的实际数据,通过设立银行业收益和成本方程发现并估算出消除壁垒带来的两方面行业直接效应,即外资银行服务价格水平下降1.9%和国内银行业经济效率改进1.8%。在此基础上利用国家信息中心可计算一般均衡模型(SIC-GE)就壁垒消除对整个经济体的影响进行了系统评估。测算结果表明,两个直接效应中,改进国内银行业经济效率的经济影响是主要的;从宏观层面上看,短期内能够带来就业和GDP相对基准情景增长,同时居民消费、投资和出口有所增长。进口随着国内需求的扩张略有增长,净出口明显扩大。总体上,研究结果表明,2005年以来我国逐渐取消外资银行贸易壁垒是一项较为有效的政策举措,具有较好的示范作用。     

The Competitiveness of Commercial Banks in Ghana

Abstract: The paper empirically investigates the degree of bank competition and intermediation efficiency in Ghana. The evidence obtained suggests a non‐competitive market structure in the Ghanaian banking system, which hampers financial intermediation. The study also finds that Ghanaian banks are monopolistically competitive. It is argued that the structure, as well as the other markets characteristics, constitutes an indirect barrier to entry thereby shielding the large profits in the Ghanaian banking system. Further, it is argued that policies that encourage and stimulate greater consolidation in the financial sector would go a long way to enhance competition among banks and improve efficiency and profitability.     

Bank productivity in China 1997–2007: Measurement and convergence

This study examines the productivity growth of the nationwide banks of China and a sample of city commercial, banks for the ten years to 2007. Using a bootstrap method for the Malmquist index, estimates of the total factor productivity growth are constructed. Five different models of inputs and outputs based on variants of the Intermediation and Production approaches and non-performing loans are treated as a bad output, are examined for the purpose of arriving at a robust measure. The productivity growth of the state-owned commercial banks (SOCBs) is compared with the joint-stock banks (JSCBs) and city commercial banks (CCBs). In general, average TFP growth has been neutral over the period for the SOCBs and JSCBs but positive for the CCBs in the second part of the period. Efficiency gains (catch-up) were obtained through cost reduction and technical innovation was associated with greater diversification of revenue away from interest earnings. The opening up of the banking market has not led to a discernible improvement in bank productivity growth.     

Predicting Efficiency in Angolan Banks: A Two‐Stage TOPSIS and Neural Networks Approach

This paper presents an efficiency assessment of the Angolan banks using Technique for Order Preference by Similarity to the Ideal Solution (TOPSIS). TOPSIS is a multi‐criteria decision‐making technique similar to data envelopment analysis, which ranks a finite set of units based on the minimisation of distance from an ideal point and the maximisation of distance from an anti‐ideal point. In this research, TOPSIS is used first in a two‐stage approach to assess the relative efficiency of Angolan banks using the most frequent indicators adopted by the literature. Then, in the second stage, neural networks are combined with TOPSIS results as part of an attempt to produce a model for banking performance with effective predictive ability. The results reveal that variables related to cost structure have a prominent negative impact on efficiency. Findings also indicate that the Angolan banking market would benefit from higher level of competition between institutions.     

TESTING PROFIT AND STRUCTURE RELATIONSHIP IN THE EUROPEAN BANKING MARKETS USING EFFICIENCY MEASURES

This paper provides a comparison between the developed and developing European countries through investigating the profit–structure relationship in the banking industries. The reduced‐form profit equations are estimated for each group of countries for the period 1995–2006. The results suggest that the inclusion of X‐efficiency and scale efficiency directly in the reduced‐form profit equation is crucial in explaining the bank profit–structure relationship in the European banking markets. When we control for direct measures of efficiency, the market share and concentration coefficient become insignificant in all regressions. The results support the efficiency versions of the efficient‐structure hypothesis over the relative market power and structure–conduct–performance hypothesis. For the developing economies of Europe, the findings of the paper indicate that efficiency is a crucial factor for establishing a sound banking system and the banks in these countries should increase their scale of operations to attain an optimal profit level.     

中国银行业的市场结构与银行绩效关系研究——基于33家商业银行面板数据的实证检验

以33家商业银行1997—2004年的数据为研究对象，以赫芬达尔指数作为衡量市场结构指标，本文对中国银行业市场结构与银行绩效关系进行了研究。研究结果表明，市场集中度降低对四大国有商业银行盈利能力没有产生显著性影响，但削弱了其他股份制商业银行和城市商业银行的盈利能力。市场集中度与所有银行净利息边际存在显著的负相关关系，不能跨地域经营的城市商业银行净利息边际显著低于其他商业银行。因此应该适度放开城市商业银行经营的地城限制。并防止过度竞争。     

Do Market Pressures Induce Economic Efficiency? The Case of Slovenian Manufacturing, 1994–2001

Using a unique longitudinal data set on all manufacturing firms in Slovenia from 1994 to 2001, this article analyzes how firm efficiency changed in response to changing competitive pressures associated with the transition to market. Results show that the period was one of atypically rapid growth of total factor productivity (TFP). The rise in firm efficiency occurs across almost all industries and firm types: large or small, state or private, domestic or foreign owned. Changes in firm ownership type have no direct impact on firm efficiency. However, increased market competition related to rising market share of private firms, new market entrants, foreign‐owned firms, and international trade raises TFP across all firms in an industry, whether private or state owned. In addition, competitive pressures that sort out inefficient firms of all types and retain the most efficient, coupled with the entry of new private firms that are at least as efficient as surviving firms, prove to be the major source of TFP gains. Results strongly confirm that market competition fosters efficiency.     

Foreign ownership and production efficiency: a quantile regression analysis

This study analyzes the production efficiency gains in termsof technology transfer and labour productivity changes causedby diverse degrees of foreign ownership using a sample of 4,056manufacturing firms operating in Greece in 1997. Departuresfrom normality of labour productivity and its logarithm ledto the adoption of the robust technique of quantile regression.Interesting results include a positive effect on labour productivityof foreign ownership, which stems exclusively from full andmajority owned affiliates and becomes significant only in themiddle quantiles. Productivity spillovers benefiting local firmsare also differentiated, with minority holdings exercising astronger effect in most quantiles.