Explaining efficiency differences among large German and Austrian banks

Cost-efficiency, scale efficiency, and productivity change are estimated by data envelopment analysis; and cost-efficiency is regressed on explanatory variables. No evidence is found for average productivity responding to deregulation over the period studied. State-owned banks are found to be more cost-efficient (likely owing to cheaper funds) and cooperative banks to be about as cost-efficient as private banks. Increasing economies of scale but decreasing economies of scope provide rationale for M&As among banks with similar product portfolios. Interbank and capital market funding is found to be more cost-efficient than deposits when the cost of retail networks is controlled.     

A Cost Function Analysis of the Australian Transportation Equipment Industry

This article investigates the existence of economies of scale and input cross and direct price elasticities of demand in the Australian motor vehicle industry. Our estimated cost elasticities were less than one (consistent with economies of scale), but not significantly less than one at the 10 per cent level for two versions of the model. However, the estimated cost elasticity was significantly less than one at approximately the 2.5 per cent level for a third. Thus, these results give some credibility to the infant industry argument for continued assistance to the Australian transportation equipment industry. A four-input model separating domestic and foreign intermediate goods inputs suggests that while restrictions on imported components may have given some short-run relief to the domestic components industry and increased the demand for labour domestically, they decreased the demand for domestic capital. Although the infant industry argument could support short-run protectionist policies for the industry, it appears that such policies regarding the Australian motor vehicle industry must be designed carefully with a specified phase-out period if long-term adverse results are to be avoided.     

Estimating Scale and Scope Economies with Fourier Flexible Functional Form – Evidence from Taiwan's Banking Industry

In this study the scale and scope economies for Taiwan's banking sector using panel data from 22 domestic banks for the period 1981–1997 is investigated quantitatively using both a Fourier flexible functional form, first proposed by Gallant (1981, 1982), and a translog function. This study's results favour the use of the former, based on tests of regression coefficients and on estimates of various economy measures. The Fourier evidence shows that only smaller banks exhibit increasing returns to scale, while larger banks exhibit decreasing returns to scale. Conversely, the translog indicates that all the sample groups continue to enjoy economies of scale. Banks in Taiwan exhibit scope diseconomies, which suggest that sample banks should continue efforts to diversify their financial products, which in turn could substantially reduce their average costs.     

Inefficiency in the Spanish Cooperative Banking Sector

This paper researches X-inefficiency and scale economies in Spanish cooperative banking between 1988 and 1996, using the stochastic cost frontier methodology. The Translog cost function, with three outputs and three inputs, is used to measure X-inefficiencies across time and size. During this period of time there is no important reduction in inefficiency levels, so deregulation and internationalization has little effect on the Spanish cooperative banking market. We can see that large cooperative banks are less inefficient than small ones, indicating that it would be convenient to increase the size of these kinds of banks in order to reduce inefficiencies in this sector. We also find scale economies during this period.     

Cost economies,efficiency and productivity growth in the Chinese banking industry: evidence from a quarterly panel dataset

This article examines cost economies, productivity growth and cost efficiency of the Chinese banks using a unique panel dataset that identifies banks’ four outputs and four input prices over the period of 1995–2001. By assessing the appropriateness of model specification, and making use of alternative methodologies in evaluating the performance of banks, we find that the joint-stock commercial banks outperform state-owned commercial banks in productivity growth and cost efficiency. Under the variable cost assumption, Chinese banks display economies of scale, with state-owned commercial banks enjoying cost advantages over the joint-stock commercial banks. Consequently, our results highlight the ownership advantage of these two types of banks and generally support the ongoing banking reform and transformation that is currently taking place in China.     

Estimating technical change by nonparametric methods

A nonparametric method using dynamic data envelopment analysis is developed here to specify and estimate a dynamic production frontier. By this technique technological progress measured by the time shift of the production frontier and the scale economies measured by increasing returns to scale are estimated from the observed input output data, which may sometimes be nonstationary. An application to US computer industry exhibits substantial technological progress and scale economies over the period 1987–1998.     

Production economies of small depository institutions in the post-FIRREA era: evidence from cooperative banks

To evaluate the effects of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) of 1989 on the cost behaviour of thrift institutions, this study examines the economies of scale and scope of cooperative banks for the years 1992–94. The findings provide evidence of economies of scale and scope over the period under study. In addition, the results suggest the presence of product-specific economies of scale and scope with respect to a few of the products included in the portfolios of the samples. Some policy implications are drawn based on the findings.     

ECONOMIES OF SCALE IN HOUSEHOLD CONSUMPTION: WITH APPLICATION TO AUSTRALIA*

This paper presents a general framework for defining the economies of scale in household consumption. It allows commodity specific economies of scale (taking into account the substitution effects). The chief contribution of the paper is to show how one can estimate economies of scale from cross section budget data without price information. The problem of identification that is inherent in these models is overcome by making use of some assumptions about the nature of goods and services employed in the estimation. The methodology developed in the paper is applied to Australian Household Expenditure Survey for 1984 to calculate item wise and overall economies of scale.     

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.     

Asymmetric interest rate pass-through in the U.S., the U.K. and Australia: New evidence from selected individual banks

This paper provides new evidence on asymmetric interest rate pass-through in the U.S., the U.K. and the Australian economies by using the Nonlinear Auto-Regressive Distributed Lag model, central bank interest rates, lending and deposit interest rates from selected banks, spanning the period 2000–2013. The results provide evidence that corroborates the asymmetric pass-through market predictions. Robustness tests are also performed by splitting the sample period into that prior to and after the recent financial crisis. The new findings document that the asymmetric character of pass-through remains active only in the case of Australia.     

Competition,economies of scale,and diversity of firm sizes

This paper presents an empirical example in which small firms are able to compete by specializing, without monopolistic conduct, despite economies of scale. The viability of small commercial banks in Illinois is established both by casual observation and by a finding of constant returns to scale, not correcting for specialization. A second specification of the cost function, correcting for specialization, exhibits economies of scale, suggesting that specialization is the means by which small banks survive. Monopoly conduct is ruled out by a Rosse–Panzar test, rejecting the alternative hypothesis that monopoly power has allowed inefficient banks to survive.     

Regulatory Policy and the Efficiency of the Banking Sector in Australia

This paper examines the technical efficiency of Australian banks during the post‐Wallis period (1997–2005). The results based on data envelopment analysis reveal that the extent of technical efficiency varies across the banks and over the years. The National Australia Bank, Commonwealth Bank and Macquarie Bank are found to be technically efficient, whereas Adelaide Bank, the Bank of Queensland and Westpac Bank are found to be prominently inefficient. Technical efficiency is the lowest among small banks and has declined over time largely due to deterioration in scale efficiency. Medium‐sized banks have outperformed both the small and large banks in terms of efficiency improvements. Some insights into the debate over the removal of the ‘four‐pillar’ policy are provided.     

Efficiency and economies of scale of large Canadian banks

Abstract.  This paper measures the economies of scale of Canada's six largest banks and their cost-efficiency over time. Using a unique panel data set from 1983 to 2003, we estimate pooled cost functions and derive measures of relative efficiency and economies of scale. The disaggregation of the data allows us to include non-traditional outputs as well as time-varying, bank-specific effects. Our model leads us to reject constant returns to scale. These findings suggest there are potential scale benefits in the Canadian banking industry. We also find that technological and regulatory changes have had significant positive effects on the banks' cost structure.     

The Institutional Quality Effect on Credits Provided by the Banks

Research on developing economies is deficient in analysing institutional quality dimensions that are beyond standard determinants of the provision of credits by banks. This study fills this gap by adopting a broad-based modelling approach in examining the effects of institutional quality on credit provided by banks for a large sample of developing economies. A structural model, including balanced annual panel data from the World Bank World Development Indicators and Worldwide Governance Indicators for the period 2004 to 2017, was estimated using panel-corrected standard errors and two-stage least squares estimation techniques. The core variables determining the credit provided by banks were controlled for in the estimation phase. The findings showed that the rule of law, regulatory quality and the strength of legal systems are significant determinants of credit provided by banks, among other factors. Investments in improving institutional quality can be beneficial for credit diffusion by the banks. This study is distinct from previous empirical studies of the developing economies as it directs attention to institutional quality measures on bank credit expansion in an inclusive modelling framework. It makes a significant positive contribution to the finance institutional nexus literature in terms of understanding the value and role that institutional quality plays in fostering bank credit provision in developing economies.

     

我国商业银行规模经济评价方法研究

现有的关于银行规模经济评价的理论,要么基于参数法,要么专注于非参数法,很少有将二者兼顾考虑的评价方法.本文在充分考虑参数法和非参数法利弊的基础上,针对我国商业银行的特点提出了分类规模经济评价的思想.同时在利用DEA方法获得生产可能性集前沿面的基础上,建立了通过拟合生产函数获得各种规模经济评价指标的方法.     

基于资产质量、资本和风险的我国银行规模经济测度研究

本文认为存款在我国银行经营中主要起投入要素的作用;资本结构、资产质量和风险对国有控股银行、股份制银行和城市商业银行的规模经济效率的测度存在重大影响,并影响银行的排序;近年来,我国商业银行业整体规模经济;从1995年到2005年,我国银行规模经济系数变化趋势呈平缓的"U"型。     

Comparing monetary policy rules in CEE economies: A Bayesian approach

Using the Bayesian approach, a small open economy DSGE model was estimated using a sample of quarterly data for three Central and Eastern Europe economies, Czech Republic, Hungary and Poland. The hypothesis that central banks react to exchange rate movements was tested using posterior odds ratio. For these economies, evidence was found that central banks reacted to exchange rate changes. Evidence of similar monetary policy characterized by moderate or low gradualism as well as an active and conservative monetary policy was also found, for the selected countries. When a richer DSGE model featuring habit formation and imperfect pass-through is estimated, the results are generally similar. The inclusion of exchange rate in Taylor rule can also drastically change the dynamics of inflation and output following certain shocks.     

混业经营条件下银行集中与效率--基于面板单位根与面板协整分析

基于亚洲国家的面板数据,运用面板单位根与面板协整方法研究混业经营下银行集中与银行效率的关系.理论研究表明银行集中会带来两种相反作用的效应:规模经济和专业化经济,银行集中度提高所带来规模经济上升促进银行效率;相反专业化经济下降损害银行效率.实证分析(1)支持理论所表明的均衡关系,银行效率与银行集中等变量存在协整关系.(2)混业经营条件下,银行集中与银行效率有显著的正相关关系,规模经济效应大于专业化经济效应.因此混业条件下,提高银行效率必须寻求有效途径,加强竞争,适度提高商业银行的集中度.     

Determinants of cross‐border bank acquisitions in transition economies1

We analyse the microeconomic determinants of cross‐border bank acquisitions in 11 transition economies over the period 1992–2006. We find that foreign banks target relatively large and efficient banks when they enter transition economies with weak institutions. This evidence provides support for the ‘market power’ hypothesis. However, when foreign banks enter more developed transition economies that have made progress in economic reform, they acquire less efficient banks. This result is in line with the efficiency hypothesis. We use a multilevel mixed effects logit model that allows us to explicitly incorporate the macroeconomic and institutional heterogeneity of the transition economies into our analysis.     

Estimation of scale and scope economies in multiproduct banking: evidence from the Fourier flexible functional form with panel data

An empirical study is conducted on scale and scope economies for Taiwan's banking industry with panel data using a Fourier flexible cost function developed by Gallant and a translog cost function, both of which take economic efficiency into account. It is found that the Fourier form is more appropriate than the traditional translog form in fitting the data, and that various efficiency measures computed using the Fourier function are compatible with each other, while those computed using the translog function are not. The Fourier evidence shows that sample banks continue to enjoy economies of scale, and exhibit scope diseconomies, which indicates that greater product diversification can reduce banking costs through product-mix economies. Banks may benefit from further diversifying their line of financial services.