International evidence on the impact of regulations and supervision on banks' technical efficiency: An application of two-stage data envelopment analysis

Review of Quantitative Finance and Accounting

Volumn 30, Issue 2, 2008, Pages 187-223

  Pasiouras, Fotios ^a  

^a UNIVERSITY OF BATH   (United Kingdom)

Author keywords

Banking; Data envelopment analysis; Efficiency; Regulations; Tobit

Indexed keywords

EID: 38149097721     PISSN: 0924865X     EISSN: 15737179     Source Type: Journal    
DOI: 10.1007/s11156-007-0046-7     Document Type: Article

References (118)

1. Akhigbe A, McNulty JE (2003) The profit efficiency of small US commercial banks. J Banking Finance 27:307-325
2. Allen L, Rai A (1996) Operational efficiency in banking: an international comparison. J Banking Finance 20:655-672
3. Altunbas Y, Chakravarty SP (1998) Efficiency measures and the banking structure in Europe. Econ Lett 60:205-208
4. Altunbas Y, Gardener EPM, Molyneux P, Moore B (2001) Efficiency in European banking. Eur Econ Rev 45:1931-1955
5. Altunbas Y, Liu M-H, Molyneux P, Seth R (2000) Efficiency and risk in Japanese banking. J Banking Finance 24:1605-1628
6. Ataullah A, Cockerill T, Le H (2004) Financial liberalization and bank efficiency: a comparative analysis of India and Pakistan. Appl Econ 36:1915-1924
7. Ataullah A, Le H (2006) Economic reforms and bank efficiency in developing countries: the case of the Indian banking industry. Appl Financ Econ 16: 653-663
8. Banker RD, Charnes A, Cooper WW (1984) Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis. Manage Sci 30:1078-1092
9. Barth JR, Caprio G Jr, Levine R (2001a) The regulation and supervision of bank around the world: a new database. In: Litan RE, Herring R (eds) Integrating emerging market countries into the global financial system, Brookings-Wharton papers in financial services, Brooking Institution Press, pp 183-240
10. Barth JR, Caprio G Jr, Levine R (2001b) Banking systems around the globe: Do regulations and ownership affect performance and stability? In: Mishkin FS (ed) Prudential Supervision: what works and what doesn't. University of Chicago Press, pp 31-88
11. Barth JR, Caprio G Jr, Levine R (2003b) Bank regulation and supervision: lessons from a new database In: JoseAntonio Murillo Garza (ed) Macroeconomic stability, financial markets, and economic development. Banco de Mexico, Mexico City
12. Barth JR, Caprio G Jr, Levine R (2004a) Bank regulation and supervision: what works best? J Financ Intermed 13:205-248
13. Barth J.R, Caprio G Jr, Levine R (2004b) Guide to the 2003 World Bank Survey, available at http://www.worldbank.org/research/projects/bank_regulation. htm
14. Barth JR, Dopico LG, Nolle DE, Wilcox JA (2002) Bank safety and soundness and the structure of bank supervision: a cross-country analysis. Int Rev Finance 3:163-188
15. Barth JR, Nolle DE, Phumiwasana T, Yago G (2003a) A Cross-Country Analysis of the Bank Supervisory Framework and Bank Performance. Financial Markets. Institutions and Instruments 12:67-120
16. Bauer PW, Berger AN, Ferrier GD, Humphrey DB (1998) Consistency conditions for regulatory analysis of financial institutions: a comparison of frontier efficiency methods. J Econ Bus 50:85-114
17. Beatty AL, Gron A (2001) Capital, portfolio, and growth: bank behavior under risk-based capital guidelines. J Financ Serv Res 20:5-31
18. Beccalli E, Casu B, Girardone C (2006) Efficiency and Stock Performance in European Banking. J Bus Finance Account 33:245-262
19. Beck T, Demirguc-Kunt A, Levine R (2000) A new database on financial development and structure. World Bank Econ Rev 14:597-605
20. Beck T, Demirguc-Kunt A, Peria MSM (2005) Reaching out: Access to and use of banking services across countries. Working Paper, September, World Bank
21. Beck T, Demirguc-Kunt A, Levine R (2006a) Bank concentration, competition and crises: First results. J Bank Finance 30:1581-1603
22. Beck T, Demirguc-Kunt A, Levine R (2006b) A new database on financial development and structure (1960-2005). World Bank, Revised September 25
23. Berg S, Forsund F, Jansen E (1992) Malmquist indices of productivity growth during the deregulation of Norwegian banking, 1980-1989. Scand J Econ 94:211-228
24. Berg SA, Forsund FR, Hjalmarson L, Suominen M (1993) Banking efficiency in the Nordic Countries. J Bank Finance 17:371-388
25. Bergendahl G (1998) DEA and benchmarks-an application to Nordic banks. Annal Oper Res 82:233-249
26. Berger AN, DeYoung R (1997) Problem loans and cost efficiency in commercial banks. J Bank Finance 21:849-870
27. Berger AN, Hancock D, Humphrey DB (1993) Bank efficiency derived from the profit function. J Bank Finance 17:317-347
28. Berger AN, Humphrey DB (1991) The dominance of inefficiencies over scale and product mix economies in banking. Journal of Monetary Economics 28:117-148
29. Berger AN, Humphrey DB (1997) Efficiency of financial institutions: International survey and directions for future research. Eur J Oper Res 98:175-212
30. Berger AN, Mester LJ (2003) Explaining the dramatic changes in performance of US banks: technological change, deregulation, and dynamic changes in competition. J Financ Intermed 12:57-95
31. Besanko D, Kanatas G (1996) The regulation of bank capital: do capital standards promote bank safety? J Financ Intermed 5:160-183
32. Besanko D, Thakor A (1992) Banking deregulation: allocational consequence of relaxing entry barriers. J Bank Finance 16:909-932
33. Bhattacharya S, Boot A, Thakor A (1998) The economics of bank regulation. J Money Credit Bank 30:745-770
34. Bhattacharya S, Thakor A (1993) Contemporary banking theory. J Financ Intermed 3: 2-50
35. Blum J (1999) Do capital adequacy requirements reduce risks in banking? J Bank Finance 23:755-771
36. Bonin JP, Hasan I, Wachtel P (2005) Bank performance, efficiency and ownership in transition countries. J Bank Finance 29:31-53
37. Bos JWB, Kool CJM (2006) Bank efficiency: the role of bank strategy and local market conditions. J Bank Finance 30:1954-1974
38. Boyd JH, Chang C, Smith BD (1998) Moral hazard under commercial and universal banking. J Money Credit Bank 30:426-468
39. Boyd JH, Levine R, Smith BD (2001) The impact of inflation on financial sector performance. J Monet Econ 47:221-248
40. Calem P, Rob R (1999) The impact of capital-based regulation on bank risk-taking. J Financ Intermed 8:317-352
41. Canhoto A, Dermine J (2003) A note on banking efficiency in Portugal, New vs Old banks. J Bank Finance 27:2087-2098
42. Caprio G Jr, Martinez AE (2000) Avoiding disaster: policies to reduce the risk of banking crises. World Bank mimeo, Working paper no 47, Egyptian Center for Economic Studies
43. Carvallo O, Kasman A (2005) Cost efficiency in the Latin American and Caribbean banking systems. J Int Financ Market Institut Money 15:55-72
44. Casu B, Girardone C, Molyneux P (2004) Productivity in European banking-a comparison of parametric and non-parametric approaches. J Bank Finance 28:2521-2540
45. Casu B, Girardone C (2006) Bank competition, concentration and efficiency in the single European market. The Manchester School 74:441-468
46. Casu B, Molyneux P (2003) A comparative study of efficiency in European banking. Appl Econ 35:1865-1876
47. Cavallo L, Rossi SPS (2002) Do environmental variables affect the performance and technical efficiency of European banking systems? A parametric analysis using the stochastic frontier approach. Eur J Finance 8:123-146
48. Charnes A, Cooper WW, Rhodes E (1978) Measuring the efficiency of decision making units. Eur J Oper Res 2:429-444
49. Claessens S, Demirguc-Kunt A, Huizinga H (2001) How does foreign entry affect domestic banking markets? J Bank Finance 25:891-911
50. Claessens S, Klingebiel D (2000) Competition and scope of activities in financial services. Mimeo. World Bank, Washington D.C., April
51. Coelli T (1996a) A Guide to FRONTIER Version 4.1: a computer program for stochastic frontier production and cost function estimation. CEPA Working Paper 96/07, University of New England, Australia
52. Coelli T (1996b) A Guide to DEAP Version 2.1: A Data Envelopment Analysis (Computer) Program. CEPA Working Paper 1996/08, available at: http://www.une.edu.au/econometrics/cepa.htm
53. Coelli T, Prasada Rao DS, Battese GE (1999) An introduction to efficiency and productivity analysis. Kluwer Academic Publishers, USA
54. Cooper WW, Seiford LM, Tone K (2000) Data envelopment analysis. A comprehensive text with models, applications, references and dea-solver software. Kluwer Academic Publishers, USA
55. Cordella T, Yeyati EL (2002) Financial opening, deposit insurance, and risk in a model of banking competition. Eur Econ Rev 46:471-485
56. Das A, Ghosh S (2006) Financial deregulation and efficiency: an empirical analysis of Indian banks during the post reform period. Review of Financial Economics, in press
57. De Nicolo G (2000) Size, charter value and risk in banking: an international perspective. international finance discussion papers, Number 689, Board of Governors of the Federal Reserve System, December
58. De Nicolo D, Bartholomew P, Zaman J, Zephirin M (2004) Bank consolidation, internationalization, and conglomeration: trends and implications for financial risk. Financ Market Institut Instrum 13: 173-217
59. Demirguc-Kunt A, Detragiache E (2002) Does deposit insurance increase banking system stability? An empirical investigation. J Monet Econ 49:1373-1406
60. Demirguc-Kunt A, Detragiach E, Tressel T (2006) Banking on the principles: compliance with basel core principles and bank soundness. World Bank Policy Research Working Paper 3954, June
61. Demirguc-Kunt A, Huizinga H (1999) Determinants of commercial bank interest margins and profitability: some international evidence. World Bank Econ Rev 13:379-408
62. Demirguc-Kunt A, Huizinga H (2000) Financial structure and bank profitability. World Bank Policy Research Working Paper 2430
63. Demirguc-Kunt A, Kane EJ (2002) Deposit insurance around the world: where does it work? J Econ Perspect 16:175-195
64. Demirguc-Kunt A, Karacaovali B, Laeven L (2005) Deposit insurance around the world: a comprehensive database. World Bank Policy Research Working Paper 3628, June
65. Demirguc-Kunt A, Laeven L, Levine R, (2004) Regulations, market structure, institutions, and the cost of financial intermediation. J Money Credit Bank 36:593-622
66. Demirguc-Kunt A, Levine R (1999) Bank-based and market-based financial systems: cross-country comparisons, World Bank, Policy Research Working Paper Series, Number 2143, 31 July
67. Dietsch M, Lozano-Vivas A (2000) How the environment determines banking efficiency: a comparison between French and Spanish industries. J Bank Finance 24:985-1004
68. Dogan E, Fausten D (2003) Productivity and technical change in Malaysian banking: 1989-1998. Asia-Pacific Financ Market 10:205-237
69. Drake L (2001) Efficiency and productivity change in UK banking. Appl Financ Econ 11:557-571
70. Drake L, Hall MJB (2003) Efficiency in Japanese banking: an empirical analysis. J Bank Finance 27:891-917
71. Drake L, Hall MJB, Simper R (2006) The impact of macroeconomic and regulatory factors on bank efficiency: a non-parametric analysis of Hong Kong's banking system. J Bank Finance 30:1443-1466
72. Fernandez AI, Gonzalez F (2005) How accounting and auditing systems can counteract risk-shifting of safety nets in banking: Some international evidence. J Financ Stab 1:466-500
73. Fries S, Taci A (2005) Cost efficiency of banks in transition: Evidence from 289 banks in 15-post communist countries. J Bank Finance 29:55-81
74. Goddard JA, Molyneux P, Wilson JOS (2001) European Banking: Efficiency, Technology and Growth. John Wiley & Sons Ltd, England
75. Gonzalez F (2005a) Determinants of bank market structure: efficiency and political economy variables. Working Paper, University of Oviedo
76. Gonzalez F (2005b) Bank regulation and risk-taking incentives: an international comparison of bank risk. J Bank Finance 29:1153-1184
77. Grigorian DA, Manole V (2002) Determinants of Commercial Bank Performance in Transition: An Application of Data Envelopment Analysis. World Bank Policy Research Working Paper 2850, June
78. Guevara JF, Maudos J (2002) Inequalities in the efficiency of the banking sectors of the European Union. Appl Econ Lett 9:541-544
79. Halkos GE, Salamouris DS (2004) Efficiency measurement of the Greek commercial banks with the use of financial ratios: a data envelopment analysis approach. Manage Account Res 15:201-224
80. Hasan I, Lozano-Vivas A, Pastor JT (2000) Cross-border performance in European Banking. Bank of Finland Discussion Papers, no 24/2000, Helsinki
81. Hauner D (2005) Explaining efficiency differences among large German and Austrian banks. Appl Econ 37:969-980
82. Havrylchyk O (2006) Efficiency of the polish banking industry: Foreign versus domestic banks. J Bank Finance 30:1975-1996
83. Hendrickson JM, Nichols MW (2001) How does regulation affect the risk taking of banks? A US and Canadian perspective. J Comp Policy Anal Res Practice 3:59-83
84. Hollo D, Nagy M (2006) Bank Efficiency in the Enlarged European Union. MNB Working Papers 2006/3, Magyar Nemzeti Bank (The Central Bank of Hungary)
85. Hughes JP, Mester LJ (1993) A quality and risk-adjusted cost function for banks: Evidence on the 'too-big-to fail' doctrine. J Product Anal 4:293-315
86. Isik I, Hassan MK (2002) Technical, scale and allocative efficiencies of Turkish banking industry. J Bank Finance 26:719-766
87. Isik I, Hassan MK (2003) Efficiency, ownership and market structure, corporate control and governance in the turkish banking industry. J Bus Finance Accoun 30:1363-1421
88. Kapopoulos P, Siokis F (2005) Market structure, efficiency and rising consolidation of the banking industry in the Euro area. Bullet Econ Res 57:67-91
89. Kasman A, Yildirim C (2006) Cost and profit efficiencies in transition banking: the case of new EU members. Appl Econ 38:1079-1090
90. Kendall SB (1992) Bank regulation under nonbinding capital guidelines. J Financ Serv Res 5:275-286
91. Koehn M, Santomero A (1980) Regulation of bank capital and portfolio risk. J Finance 35:1235-1244
92. La Porta R, Lope-de-Silanes F, Shleifer A, Vishny RW (1998) Law and finance. J Polit Econ 106:1113-1155
93. Laeven L, Levine R (2006) Corporate Governance, Regulation, and Bank Risk Taking. Working Paper, IMF and Brown University, June 11, available at SSRN
94. Lang G, Welzel P (1998) Technology and Cost Efficiency in Universal Banking. A "Thick Frontier"-analysis of the German banking industry. J Product Anal 10:63-84
95. Levine R (2004) The microeconomic effects of different approaches to bank supervision. Working Paper, February 6, University of Minnesota
96. Levine R (1998) The legal environment, banks and long-term economic growth. J Money Credit Bank 30:596-613
97. Lozano-Vivas A, Pastor JT, Pastor JM (2002) An efficiency comparison of european banking systems operating under different environmental conditions. J Product Anal 18:59-77
98. Maudos J, Pastor J (2001) Cost and profit efficiency in banking: an international comparison of Europe, Japan, and the USA. Appl Econ Lett 8:383-387
99. Maudos J, Pastor JM, Perez F, Quesada J (2002) Cost and profit efficiency in European banks. J Int Financ Market Institut Money 12:33-58
100. Merton RC (1977) An analytic derivation of the cost of deposit insurance and loan guarantees. J Bank Finance 1:3-11
101. Mester LJ (1996) A study of bank efficiency taking into account risk-preferences. J Bank Finance 20:1025-1045
102. Morgan D, Strahan PE (2004) Foreign bank entry and business volatility: evidence from US states and other countries. In: Ahumada LA, Fuentes JR (eds) Banking market structure and monetary policy. Central Bank of Chile, Santiago, pp 241-269
103. Pasiouras F (2006) Estimating the technical and scale efficiency of Greek commercial banks: the impact of credit risk, off-balance sheet activities, and international operations. Working Paper 2006.17, School of Management, University of Bath, UK
104. Pasiouras F, Gaganis C, Zopounidis C (2006) The impact of bank regulations, supervision, market structure and bank characteristics on individual bank ratings: A cross-country analysis. Rev Quantitat Finance Account 27:403-438
105. Pastor JM (2002) Credit risk and efficiency in the European banking system: a three-stage analysis. Appl Financ Econ 12:895-911
106. Pastor JM, Perez F, Quesada J (1997) Efficiency analysis in banking firms: an international comparison. Eur J Oper Res 98:395-407
107. Pastor JM, Serrano L (2005) Efficiency, endogenous and exogenous credit risk in the banking systems of the Euro area. Appl Financ Econ 15:631-649
108. Peek J, Rosengren E (2000) Implications of the globalization of the banking sector: the Latin American experience. New England Economic Review, September/October: 45-62
109. Qian J, Strahan PE (2005) How Law and Institutions Shape Financial Contracts: The Case of Bank Loans. NBER Working Papers 11052, National Bureau of Economic Research, Inc
110. Resti A (1997) Evaluating the cost-efficiency of the Italian banking system: what can be learned from the joined application of parametric and non-parametric techniques. J Bank Finance 2:221-250
111. Saxonhouse GR (1976) Estimated Parameters as Dependent Variables. Am Econ Rev 66:178-183
112. Stiglitz JE (1993) The role of the state in financial markets. In: Proceedings of the World Bank Annual Conference on Development Economics, 19-52
113. Thanassoulis E (2001) Introduction to the theory and application of data envelopment analysis. A foundation text with integrated software. Kluwer Academic Publishers, USA
114. Tortosa-Ausina E (2003) Nontraditional activities and bank efficiency revisited: a distributional analysis for Spanish financial institutions. J Econ Bus 55:371-395
115. Vander Vennet R (2002) Cost and profit efficiency of financial conglomerates and universal banks in Europe. J Money Credit Bank 34:254-282
116. Weill L (2004) Measuring cost efficiency in European banking: A comparison of frontier techniques. J Product Anal 21:133-152
117. Yildirim HS, Philippatos GC (2006) Efficiency of banks: recent evidence from the transition economies of Europe, 1993-2000. Eur J Finance (forthcoming)
118. Yu P, Luu BV (2003) Banking mergers: the impact of financial liberalization on the Taiwanese banking industry. Rev Quantitat Finance Account 20:385-413