Environmental determinants of banking efficiency in Austria

The great majority of Austrian banks operate on a regional or local basis and only a few banks provide their services on a national or even international scale. Obviously, the market environments regional or local banks face are different from that of nationwide operating banks. Casual evidence suggests that local markets condition is a very important external determinant of banking efficiency. Thus, not controlling for market conditions may substantially bias the measurement of managerial efficiency particularly of locally operating banks. In this paper we assess the internal technical efficiency (or X-efficiency) of the Austrian banking sector with the focus on environmental and non-controllable factors critical to banking markets. Analytically, we apply a multiple-stage approach based on a slacks-based DEA model (SBM) and a censored regression model, respectively. In order to cope with the inherent dependency problem of DEA-based efficiency analysis when incorporated into regression analysis we apply a Bootstrap estimator. In so doing we attempt to overcome the dependency problem which plagues the power of standard regression analysis based on DEA processed data. The empirical analysis is based on an unbalanced panel of data covering more than 800 Austrian banks ranging over 1995–2002.

Structure and performance in the Portuguese banking industry in the nineties

In this paper we study the structure-performance relationship in the Portuguese banking industry during the nineties. The hypothesis of pure collusion, efficient structure, modified efficient structure and hybrid collusion/efficiency are tested using a direct measure of efficiency. Our results endorse the hybrid collusion/efficiency hypothesis in the first half of the nineties. However, after 1994 results lend some support to the modified efficient structure hypothesis. Competition at the local level remains important throughout the decade, suggesting that banks in less competitive local markets exert some level of market power and exhibit superior performances.Received: November 1999, Accepted: February 2003, JEL Classification: C21, L11Correspondence to: Victor MendesThe authors wish to thank Pedro Pita Barros and two anonymous referees for helpful comments. The usual disclaimer applies. Financial support from JNICT - Junta Nacional de Investigação Científica e Tecnológica (grant PCSH/ECO/938/95) is acknowledged.     

Exchange rates and fundamentals: A bootstrap panel data analysis

This study attempts to re-examine the Granger non-causality from exchange rates to observed fundamentals based on the present value model of Engel and West (2005). To this end, we employ the bootstrap panel Granger non-causality analysis, which allows us to untangle the causal nexus between exchange rates and fundamentals in panel data. Among the main results, it is found that the null hypothesis of no cross-sectional dependence across the members of the panel is strongly rejected, indicating that the bootstrap critical value is required in conducting the panel Granger non-causality test. The null hypothesis of Granger non-causality running from the fundamentals to exchange rates is significantly rejected, implying that the monetary approach of exchange rate determination is a useful benchmark to understand the evolution of the exchange rate. Empirical evidences also show that exchange rates Granger-case the fundamentals, supporting the view that exchange rates are determined as the present value that depends in part on observed fundamentals.     

The long-run effect of aid on health: evidence from panel cointegration analysis

Although a major objective of aid donors is to improve health outcomes in recipient countries, there is relatively little research on whether aid to the health sector leads to improved health outcomes, and even less on the impact of total aid. This paper examines the relationship between total aid and population health using panel cointegration and causality techniques designed to deal with problems afflicting previous aid-health studies: spurious regressions, omitted variables, endogeneity, cross-sectional dependence, and parameter heterogeneity. The main results are: (i) aid has, on average, a small but negative long-run effect on health, (ii) while the long-run (or trend) effect of aid on health is negative, the short-run (temporary) effect of aid on health is positive, (iii) causality runs in only one direction, from aid to health, and (iv) aid worsens health mainly in sub-Saharan countries, but has a positive, albeit statistically insignificant, long-run impact on health in Latin American and Caribbean countries and in countries with negative values of net ODA.     

Managerial efficiency in Taiwan bank branches: A network DEA

Taiwan's banking industry remains highly fragmented and competitive after a series of financial liberalization and restructuring. With the enforcement of these fiscal policies, domestic banking institutions face a more dynamic, increasingly intense and highly competitive environment even as the banking industry's overall efficiency has gradually been enhanced. This structural change has further forced individual banking institutions, especially state-owned banks, to inspect the performance of their branches and identify improvement directions so as to gain further competitive advantages. To conduct a valid, fair and reliable evaluation on Taiwan's bank branches, we integrate a two-stage series performance model and fuzzy multiobjective model. A new scheme that considers the complementation of production and intermediation activities within a branch and overcomes the shortage of the traditional network DEA methodology about DMUs cannot be assessed on a common base. The results indicate that the overall performances of mixed ownership bank branches are superior to those of state-owned bank branches, representing that the advantages of banking privatization have some remedial effects for improving the managerial inefficiency of state-owned banks. In addition, the sensitivity analysis and decision-making matrix herein help bank management to identify branches' efficiency, weakness, and directions for improvement.     

The causal relationship between natural gas consumption and economic growth: evidence from the G7 countries

This article re-examines the nature of the causality between natural gas consumption and economic growth in G7 countries over the period from 1965 to 2011. We employ the Granger causality procedure proposed by Emirmahmutoglu and Kose (2011) which takes into account cross-sectional dependency and heterogeneity across countries. Our overall empirical results support the neutrality hypothesis for the panel while the individual country results confirm the same result with the exception of the case of UK, where the conservation hypothesis is confirmed, showing that GDP causes natural gas consumption in the country. These results make policies that promote the consumption of natural gas risk-free with regard to their effects to the economic growth and development levels.     

The long-run causal relationship between exports and economic growth in the euro area

This article employs panel methods that mitigate heterogeneity and cross-sectional dependence to determine the direction and sign of long run causality between exports and economic growth in the euro area economies from 2000 to 2014. The empirical evidence indicates that there is a unidirectional long-run Granger causality relationship from exports to economic growth in the euro area countries.     

Democracy,regulation and competition in emerging banking systems

This paper develops a political economy framework to analyse the relations among democracy, financial regulation and banking competition in the emerging banking systems of Central and Eastern Europe. We develop extensive new yearly non-structural indices of bank competition instead of concentration indices as in the previous literature that show its evolution over time with the level of democracy. In addition, we directly test for linkages between democracy, financial regulation and banking competition. Using an unbalanced panel data set over the period 1994–2016 for 617 banks, we show that more democratic countries with better regulatory framework lead to the enhancement of competition. We also find significant support for the core hypothesis that financial regulatory framework in a “partially” democratic environment is inadequate. Given that financial regulatory framework in a “partially” democratic environment can be inadequate we find a U-shaped relation in the sense that there is a threshold level of democracy beyond which banking systems in those countries are more competitive.     

A sneeze in the U.S., a cough in Japan,but pneumonia in Taiwan? An application of the Markov-Switching vector autoregressive model

This paper examines the lead–lag relationships among the output of Taiwan, Japan and the U.S. Three testing methods are employed: the traditional linear Granger causality test, Hiemstra and Jones' [Hiemstra, C., Jones, J.D., 1994. Testing for linear and nonlinear Granger causality in the stock price-volume relation. Journal of Finance 49, 1639–1664] nonlinear Granger causality test and Warne's [Warne, A., 2000. Causality and regime inference in a Markov-S switching VAR, Working Paper no. 118, Sveriges Riksbank, Stockholm.] Granger causality test under the Markov-Switching model. We find that the causal ordering is unclear and depends on the model we used. Because Markov-Switching model imposes few restrictions in estimation, we tend to use its estimated results but bear in mind that the evidence is sensitive. First, the common shock hypothesis is found that most probably exists between Taiwan and the U.S. Next, we conclude that Japan tends to lead Taiwan's output, to a certain extent. Last, there is no causal ordering between the U.S. and Japan economies.     

Casinos and political corruption in the United States: a Granger causality analysis

The commercial casino industry experienced an unprecedented expansion in the United States during the 1990s. As the industry has grown, so has the anecdotal evidence that links the casino industry with political corruption. However, there have been no empirical analyses of the issue. We use state-level panel data from 1985–2000 to posit a Granger causality analysis of the relationship between corruption convictions of state public officials and the predicted adoptions of casinos at the state level. We find evidence that predicted casino adoptions Granger cause corruption convictions. This finding is suggestive of a scenario of regulatory capture and may help explain why state-level gaming regulatory agencies have a history of softening gaming regulations after the initial introduction of casinos. Our study provides the first empirical evidence linking casinos to political corruption.     

Research on the mutual relations between ISP and ASP efficiency changes for the sustainable growth of the Internet industry

Innovations in Internet networks and applications are equally important. However, there is controversy in the literature regarding whether it is network or application innovation that leads to the development and innovation of Internet industries. In this study, the mutual relations of Internet service providers’ (ISP) and application service providers’ efficiency changes are analysed empirically using a Granger causality test. Over the entire period of 1998–2011, efficiency changes of web service companies positively Granger-cause those of ISPs and vice versa. In the case of VoIP and streaming services, however, efficiency changes of VoIP and streaming services Granger-cause those of ISPs during the former half period, whereas those of ISPs negatively Granger-cause efficiency changes of streaming services during the latter half. As services that require heavy data traffic and QoS guarantees are launched, a policy that promotes virtuous circulation between ISPs and application service providers (ASPs) is necessary for the development of all Internet-related industries.     

A panel data analysis of productive efficiency in freestanding health clinics

By using a panel data on a number of freestanding health clinics in New York State over 1984–1987, we have estimated the production function for ambulatory care after controlling for unmeasured clinic-specific managerial efficiency. We found significant differences in management efficiency, which peaks around 50500 visits per year. The optimal staffing ratio between doctors, extenders and nurses was found to be around 1∶1/3∶1, in order for a clinic to be on the efficiency frontier.     

How significant is the alleged unfair advantage enjoyed by state-owned banks in Germany?

The European Commission argues that the state-owned banks inGermany enjoy an unfair advantage over the private sector banksin the cost of borrowing funds in the financial markets becauseof state guarantees that public sector banks are perceived toenjoy. This note demonstrates that the blame for the comparativelypoor profitability of private sector banks in Germany cannotbe laid at the door of the relatively cheaper funds that thepublic sector banks can raise in the wholesale markets.     

Cost efficiency of the Chinese banking sector: A comparison of stochastic frontier analysis and data envelopment analysis

This paper investigates the consistency of efficiency scores obtained from the stochastic frontier analysis and data envelopment analysis methods. We estimate cost efficiency and economies of scale based on an unbalanced panel data set of Chinese banks over the period 1994 to 2007. The results suggest moderate consistency between parametric and non-parametric frontier methods in efficiency scores rankings, identification of best and worst practise banks, the stability of efficiency scores over time and correlation between frontier efficiency and accounting based performance measures. Based on the findings, we conclude that the use of multiple frontier techniques for efficiency analysis is to be strongly recommended and that this methodological cross-checking analysis will result in more robust and convincing assessments of bank performance.     

Another look at the Relationship between Telecommunications Investment and Economic Activity in the United States

Abstract

In a recent issue of this journal, Beil et al. (2005, hereafter, BFJ) examined the relationship between telecommunications investment and economic growth in the United States over the period 1947–1996. Based on results from Granger-Sims test, BFJ conclude that ‘… investment by telecommunications firms is caused by, but does not cause, economic activity, and the findings are robust across lag lengths’. However, using another version of the Granger causality test due to Toda & Yamamoto (1995) and the same data set transformed into natural logarithms, the evidence in this paper indicates a feedback where there was a bi-directional causality between telecommunications investment and economic growth. This seems to suggest that policies aimed at stimulating the US economy by accelerating investment in the telecommunications sector may be successful.     

The relationship between R&D,investment and patents: a panel data analysis

This paper estimates the effect of research and investment activities on patents across countries, industries and over time, using Poisson and negative binomial distribution models. The first result of the paper is the recognition of the importance of investment activities in contributing to technical change. The positive role of research expenditures is also confirmed but its elasticity is found to be lower than in previous studies. Important differences across sectors emerge: research expenditures are found to be more effective in generating patents in science based industries, while investment is particularly significant in supplier dominated and production intensive industries. Finally, in most sectors, the estimated R&D and investment coefficients lie outside the confidence intervals calculated around the pooled coefficients.     

Cost efficiency and banking performances in a partial universal banking system: application of the panel smooth threshold model

This paper studies the cost efficiency of bank in a partial universal banking system (PUBS), Taiwan. Instead of assuming one common technology in the bank cost function, two technologies are assumed to be imbedded in the cost function. Fee revenues are used as threshold to divide the banks into two technologies. A bank whose fee revenues exceeding the threshold is designated as universal bank technology while falling below the threshold is designated as traditional deposit-loan technology. The panel smooth transition model is adopted, which allows banks to smoothly adjust between the two technologies. Two criteria are suggested, overbanking and the trend-toward-fee revenues, to assess the new model's performances. With respect to scale economies, the results do find a panel smooth transition model yield more reasonable results than the conventional OLS and random effect of panel data approach. Based on the panel smooth transition model, the optimal fixed asset size is around ten billion New Taiwan dollars.     

Social security expenditure and GDP in OECD countries: A cointegrated panel analysis

Abstract

Using panel data unit root tests and panel cointegration tests, as well as estimation techniques appropriate for heterogeneous panels such as the full modified OLS, this paper re-examines the long-run co-movement and the causal relationship between GDP and social security expenditure in a bivariate model, employing data on 25 OECD countries from 1980 to 2001. Our cointegration test results show strong evidence in favour of the existence of a long-run equilibrium cointegrating relationship between GDP and social security expenditure after allowing for a heterogeneous country effect. Regarding the panel-based error correction model, we find that GDP and social security expenditure lack short-run causality, but reveal the existence of long-run bidirectional causality. This shows that, in the long run, economic growth must be based on a social welfare policy that should be carried out, and economic growth can facilitate contiguous development in a social welfare policy. Lastly, we also provide evidence to support that social security expenditure can affect growth through the savings and human capital accumulation in OECD countries.     

Market maker competition and price efficiency: Evidence from China

We test the relationship between market maker competition and stock price efficiency. Using the number of market makers as a proxy for competition, the results show a strong positive correlation between competition and stock price efficiency. Moreover, price efficiency is higher when competing market makers have higher research ability. We suggest that market maker competition increases price efficiency through two channels: 1) Competition decreases transaction costs, and 2) Uninformed market makers learn from orders submitted by informed market makers through competition. The latter happens only in the group of market makers with higher experiences. The results imply that the price efficiency can be improved by enhancing the competition of market makers with high research ability and experiences.     

Economic reforms,efficiency and productivity in Chinese banking

This paper analyzes the impact of banking reforms on efficiency and total factor productivity (TFP) change in Chinese banking industry. Using an input distance function, we find that joint-equity banks are more efficient than wholly state-owned banks (WSOBs). Furthermore, both WSOBs and joint-equity banks are found to be operating slightly below their optimal size, suggesting potential advantages in expansion of their businesses. Overall, TFP growth was 4.4% per annum for the sample period 1993–2002. Joint-equity banks experienced much higher growth in TFP (5.5% per annum) compared to the WSOBs (1.4% per annum).