Regulations and productivity growth in banking: Evidence from transition economies

Journal of Money, Credit and Banking

Volumn 43, Issue 4, 2011, Pages 735-764

  Delis, Manthos D ^a   Molyneux, Philip ^b   Pasiouras, Fotios ^c  

^a UNIVERSITY OF IOANNINA   (Greece)

^b BANGOR UNIVERSITY   (United Kingdom)

^c TECHNICAL UNIVERSITY OF CRETE   (Greece)

Author keywords

Banks; Basel II; Productivity; Regulations

Indexed keywords

EID: 79956139626     PISSN: 00222879     EISSN: 15384616     Source Type: Journal    
DOI: 10.1111/j.1538-4616.2011.00393.x     Document Type: Article

References (79)

1. Altunbas, Yener, Edward P.M. Gardener, Philip Molyneux, and Barry Moore. (2001) "Efficiency in European Banking. European Economic Review, 45, 1931-55.
2. Altzinger, Wilfried and Ivanka Petkova (Eds). (2007) Impacts of Foreign Direct Investments on Banking Sectors in South East European Countries. Sofia: Economic Policy Institute.
3. Aysan, Ahmet Faruk, and Sanli Pinar Ceyhan. (2008) "What Determines the Banking Sector Performance in Globalized Financial Markets? The Case of Turkey. Physica A, 387, 1593-1602.
4. Barth, James R., Gerard Caprio Jr., and Ross Levine. (2001a) "Banking Systems around the Globe: Do Regulations and Ownership Affect Performance and Stability?" In Prudential Supervision: What Works and What Doesn't, edited by F.S. Mishkin, pp. 31-88. Chicago: University of Chicago Press.
5. Barth, James R., Gerard Caprio Jr., and Ross Levine. (2001b) "The Regulation and Supervision of Bank around the World: A New Database." In Integrating Emerging Market Countries into the Global Financial System, Brookings-Wharton Papers in Financial Services, edited by R.E. Litan and R. Herring, pp. 183-240. Washington, DC: Brooking Institution Press.
6. Barth, James R., Gerard Caprio Jr., and Ross Levine. (2003) "Bank Regulation and Supervision: Lessons from a New Database." In Macroeconomic Stability, Financial Markets, and Economic Development, edited by J.A.M. Garza. Mexico City: Banco de Mexico.
7. Barth, James R., Gerard Caprio Jr., and Ross Levine. (2004) "Bank Regulation and Supervision: What Works Best? Journal of Financial Intermediation, 13, 205-48.
8. Barth, James R., Gerard Caprio Jr., and Ross Levine. (2006) Rethinking Bank Regulation: Till Angels Govern. Cambridge, UK: Cambridge University Press.
9. Barth, James R., Gerard Caprio Jr., and Ross Levine. (2007) "Bank Regulations Are Changing: But for Better or Worse?" July, World Bank.
10. Barth, James R., Luis G. Dopico, Daniel E. Nolle, and James A. Wilcox. (2002) "Bank Safety and Soundness and the Structure of Bank Supervision: A Cross-Country Analysis. International Review of Finance, 3, 163-88.
11. Barth, James R., Daniel E. Nolle, Triphon Phumiwasana, and Glenn Yago. (2003) "A Cross-Country Analysis of the Bank Supervisory Framework and Bank Performance. Financial Markets, Institutions and Instruments, 12, 67-120.
12. Beck, Thorsten. (2010) "The Role of Cross-Border Banks in the Current Crisis: A Mitigating or Exacerbating Impact?" Presentation of a draft chapter of a forthcoming policy report on Cross-Border Banking in Europe after the Crisis, Duisenberg School of Finance, Amsterdam, October.
13. Beck, Thorsten, Asli Demirguç-Kunt, and Ross Levine. (2000) "A New Database on Financial Development and Structure. World Bank Economic Review, 14, 597-605.
14. Beck, Thorsten, Asli Demirguç-Kunt, and Ross Levine. (2006) "Bank Supervision and Corruption in Lending. Journal of Monetary Economics, 53, 2131-63.
15. Berger, Allen N. (1995) "The Relationship between Capital and Earnings in Banking. Journal of Money, Credit, and Banking, 27, 432-56.
16. Berger, Allen N., and Robert DeYoung. (1997) "Problem Loans and Cost Efficiency in Commercial Banks. Journal of Banking and Finance, 21, 849-70.
17. Bonin, John P., Iftekhar Hasan, and Paul Wachtel. (2005a) "Privatization Matters: Bank Efficiency in Transition Countries. Journal of Banking and Finance, 29, 2155-78.
18. Bonin John P., Iftekhar Hasan, and Paul Wachtel. (2005b) "Bank Performance, Efficiency and Ownership in Transition Countries, "Journal of Banking and Finance, 29, 31-53.
19. Bonin, John P., and Paul Wachtel. (2003) "Financial Sector Development in Transition Economies: Lessons from the First Decade. Financial Markets, Institutions & Instruments, 12, 1-66.
20. Brealey, Richard A., and Evi C. Kaplanis. (1996) "The Determination of Foreign Banking Location. Journal of International Money and Finance, 15, 577-97.
21. Brissimis, Sophocles N., Manthos D. Delis, and Nikolaos I. Papanikolaou. (2008) "Exploring the Nexus between Banking Sector Reform and Performance: Evidence from Newly Acceded EU Countries. Journal of Banking and Finance, 32, 2674-83.
22. Casu, Barbara, Claudia Girardone, and Philip Molyneux. (2004) "Productivity Change in European Banking: A Comparison of Parametric and Non-Parametric Approaches. Journal of Banking and Finance, 28, 2521-40.
23. Caves, Douglas W., Laurits R. Christensen, and W. Erwin Diewert. (1982) "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity. Econometrica, 50, 1393-1414.
24. Clark, Jeffrey A., and Thomas F. Siems. (2002) "X-Efficiency in Banking: Looking beyond the Balance Sheet. Journal of Money, Credit and Banking, 34, 987-1013.
25. Coelli, Timothi J., D.S. Prasada Rao, Christopher J. O'Donnell, and George E. Battese. (2005) An Introduction to Efficiency and Productivity Analysis, 2nd ed. New York: Springer.
26. Delis, Manthos D., and Panagiotis K. Staikouras. (Forthcoming.) "Supervisory Effectiveness and Bank Risk. Review of Finance.
27. Demirguc-Kunt, Asli, and Enrica Detragiache. (2002) "Does Deposit Insurance Increase Banking System Stability? An Empirical Investigation. Journal of Monetary Economics, 49, 1373-406.
28. Demirguc-Kunt, Asli, Enrica Detragiache, and Thierry Tressel. (2008) "Banking on the Principles: Compliance with Basel Core Principles and Bank Soundness. Journal of Financial Intermediation, 17, 511-42.
29. Demirguc-Kunt, Asli, Luc Laeven, and Ross Levine. (2004) "Regulations, Market Structure, Institutions, and the Cost of Financial Intermediation. Journal of Money, Credit and Banking, 36, 593-622.
30. DeYoung, Robert E., Joseph P Hughes, and Choon-Geol Moon. (2001) "Efficient Risk-Taking and Regulatory Covenant Enforcement in a Deregulated Banking Industry. Journal of Economics and Business, 53, 255-82.
31. European Bank for Reconstruction and Development. (2008) Transition Report 2008: Growth in Transition, November, United Kingdom.
32. European Bank for Reconstruction and Development. (2009) Transition Report 2009: Transition in Crisis? November, United Kingdom.
33. Färe, Rolf, Shawna Grosskopf, Mary Norris, and Zhongyang Zhang. (1994) "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries. American Economic Review, 84, 66-83.
34. Färe, Rolf, Shawna Grosskopf, and William L. Weber. (2004) "The Effect of Risk-Based Capital Requirements on Profit Efficiency in Banking. Applied Economics, 36, 1731-43.
35. Fernandez, Ana I., and Francisco Gonzalez. (2005) "How Accounting and Auditing Systems Can Counteract Risk-Shifting of Safety-Nets in Banking: Some International Evidence. Journal of Financial Stability, 1, 466-500.
36. Fethi, Meryem D., and Fotios Pasiouras. (2010) "Assessing Bank Efficiency and Performance with Operational Research and Artificial Intelligence Techniques: A Survey. European Journal of Operational Research, 204, 189-98.
37. Fries, Steven, Damien J. Neven, Paul Seabright, and Anita Taci. (2006) "Market Entry, Privatization and Bank Performance in Transition. Economics of Transition, 14, 579-610.
38. Fries, Steven, and Anita Taci. (2002) "Banking Reform and Development in Transition Countries." European Bank for Reconstruction and Development Working Paper No. 71.
39. Fries, Steven, and Anita Taci. (2005) "Cost Efficiency of Banks in Transition: Evidence from 289 Banks in 15 Post-Communist Countries. Journal of Banking and Finance, 29, 55-81.
40. Gallin, Joshua. (2008) "The Long-Run Relationship between House Prices and Rents. Real Estate Economics, 36, 635-58.
41. Grifell-Tatje, Emili, and C.A. Knox Lovell. (1996) "Deregulation and Productivity Decline: The Case of Spanish Savings Banks. European Economic Review, 40, 1281-1303.
42. Gilbert, R. Alton, and Paul W. Wilson. (1998) "Effects of Deregulation on the Productivity of Korean Banks. Journal of Economics and Business, 50, 133-55.
43. Hay, Jonathan R., and Andrei Shleifer. (1998) "Private Enforcement of Public Laws: A Theory of Legal Reform. American Economic Review Papers and Proceedings, 88, 398-403.
44. Isik, Ihsan. (2007) "Bank Ownership and Productivity Developments: Evidence from Turkey. Studies in Economics and Finance, 24, 115-39.
45. Jackson, Patricia, Craig Furfine, Hans Groeneveld, Diana Hancock, David Jones, William Perraudin, Lawrence Radecki, and Masao Yoneyama. (1999) "Capital Requirements and Bank Behaviour: The Impact of the Basle Accord." Basle Committee on Banking Supervision, Working Paper No. 1.
46. Kasman, Adnan, and Saadet Kirbas-Kasman. (2006) "Technical Change in Banking: Evidence from Transition Countries. International Journal of the Economics of Business, 13, 129-44.
47. Kaufmann, Daniel, Aart Kraay, and Massimo Mastruzzi. (2010) "The Worldwide Governance Indicators: Methodology and Analytical Issues." World Bank Policy Research Working Paper No. 5430.
48. Kazandjieva, Irina. (2007) "Management Practices Generated by Foreign Banks Entry." In Impacts of Foreign Direct Investments on Banking Sectors in South East European Countries, edited by Wilfried Altzinger and Ivanka Petkova. Sofia: Economic Policy Institute.
49. Khan, Shakeeb, and Arthur Lewbel. (2007) "Weighted and Two-Stage Least Squares Estimation of Semiparametric Truncated Regression Models. Econometric Theory, 23, 309-47.
50. Kopecky, Kenneth J., and David VanHoose. (2006) "Capital Regulation, Heterogeneous Monitoring Costs, and Aggregate Loan Activity. Journal of Banking and Finance, 30, 2235-55.
51. Koutsomanoli-Filippaki, Anastasia, Emmanuel Mamatzakis, and Christos Staikouras. (2009) "Structural Reforms and Banking Efficiency in the New EU States. Journal of Policy Modeling, 31, 17-21.
52. Krainer, John, and Chishen Wei. (2004) "House Prices and Fundamental Value. Federal Reserve Bank of San Francisco Economic Letter, No. 2004-27, October.
53. Leamer, Edward E. (2002) "Bubble Trouble? Your Home Has a P/E Ratio Too. UCLA Anderson Forecast, June, 1-11.
54. Lensink, Robert, and Niels Hermes. (2004) "The Short-Term Effects of Foreign Bank Entry on Domestic Bank Behaviour: Does Economic Development Matter? Journal of Banking and Finance, 28, 553-68.
55. Levine, Ross. (1996) "Foreign Banks, Financial Development, and Economic Growth." In International Financial Markets, edited by E.B. Claude. Washington, DC: AEI Press.
56. Lieu, Pang-Tien, Tsai-Lien Yeh, and Yung-Ho Chiu. (2005) "Off-Balance Sheet Activities and Cost Inefficiency in Taiwan's Banks. Service Industries Journal, 25, 925-44.
57. Maechler, Andrea M., Srobona Mitra, and DeLisle Worrell. (2007) "Decomposing Financial Risks and Vulnerabilities in Eastern Europe." International Monetary Fund Working Paper No. 07/248.
58. Mamatzakis, Emmanuel, Christos Staikouras, and Anastasia Koutsomanoli-Filippaki. (2008) "Bank Efficiency in the New European Union Member States: Is There Convergence? International Review of Financial Analysis, 17, 1156-72.
59. Meyendorff, Anna, and Anjan V. Thakor. (2002) "Romanian Financial System Reform, "In Designing Financial Systems in Transition Economies: Strategies for Reform in Central and Eastern Europe, edited by A. Meyendorff and A.V. Thakor. Cambridge, MA: MIT Press.
60. Mukherjee, Kankana, Subhash C. Ray, and Stephen M. Miller. (2001) "Productivity Growth in Large US Commercial Banks: The Initial Post-Deregulation Experience. Journal of Banking and Finance, 25, 913-39.
61. Murphy, Neil B. (2006) "Deposit Insurance, Banking Reform, and Financial Sector Development in Several Nations of Southeastern Europe. Financial Markets, Institutions & Instruments, 15, 1-55.
62. Naaborg, Ilko, and Robert Lensink. (2008) "Banking in Transition Economies: Does Foreign Ownership Enhance Profitability? European Journal of Finance, 14, 545-62.
63. Pasiouras, Fotios. (2008) "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, 30, 187-223.
64. Pasiouras, Fotios, Chrysovalantis Gaganis, and Constantin Zopounidis. (2006) "The Impact of Bank Regulations, Supervision, Market Structure, and Bank Characteristics on Individual Bank Ratings: A Cross-Country Analysis. Review of Quantitative Finance and Accounting, 27, 403-38.
65. Pasiouras, Fotios, Sailesh Tanna, and Constantin Zopounidis. (2009) "The Impact of Banking Regulations on Banks' Cost and Profit Efficiency: Cross-Country Evidence. International Review of Financial Analysis, 18, 294-302.
66. Perotti, Enrico. (2002) "Lessons from the Russian Meltdown: The Economics of Soft Legal Constraints. International Finance, 5, 359-99.
67. Pistor, Katharina, Martin Raiser, and Stanislaw Gelfer. (2000) "Law and Finance in Transition Economies. Economics of Transition, 8, 325-68.
68. Ray, Subhash C., and Evangelia Desli. (1997) "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries: Comment. American Economic Review, 87, 1033-39.
69. Scholtens, Bert. (2000) "Financial Regulation and Financial System Architecture in Central Europe. Journal of Banking and Finance, 24, 525-53.
70. Simar, Leopold, and Paul W. Wilson. (2007) "Estimation and Inference in Two-Stage, Semi-Parametric Models of Production Processes. Journal of Econometrics, 136, 31-64.
71. Stiroh, Kevin J. (2000) "How Did Bank Holding Companies Prosper in the 1990s? Journal of Banking and Finance, 24, 1703-45.
72. Stiroh, Kevin J. (2004) "Diversification in Banking: Is Noninterest Income the Answer? Journal of Money, Credit and Banking, 36, 853-82.
73. Thakor, Anjan V. (1996). "Capital Requirements, Monetary Policy, and Aggregate Bank Lending: Theory and Empirical Evidence. Journal of Finance, 51, 279-324.
74. Thorne, Alfredo. (1993) "Eastern Europe's Experience with Banking Reform: Is There a Role for Banks in the Transition? Journal of Banking and Finance, 17, 959-1000.
75. Tirtiroglu, Dogan, Kenneth N. Daniels, and Ercan Tirtiroglu. (1998) "Total Factor Productivity Growth and Regulation in U.S. Commercial Banking During 1946-1995: An Empirical Investigation. Journal of Economics and Business, 50, 171-89.
76. Tirtiroglu, Dogan, Kenneth N. Daniels, and Ercan Tirtigoglu. (2005) "Deregulation, Intensity of Competition, Industry Evolution, and the Productivity Growth of U.S. Commercial Banks. Journal of Money, Credit and Banking, 37, 339-60.
77. Tortosa-Ausina, Emili. (2003). "Nontraditional Activities and Bank Efficiency Revisited: A Distributional Analysis for Spanish Financial Institutions. Journal of Economics and Business, 55, 371-95.
78. Totev, Dimitar. (2007) "Banking Law Perspective: Regulatory Challenges and Implications of the Basel Core Principles and Basel II." In Impacts of Foreign Direct Investments on Banking Sectors in South East European Countries, edited by Wilfried Altzinger and Ivanka Petkova. Sofia: Economic Policy Institute.
79. VanHoose, David. (2007) "Theories of Bank Behaviour under Capital Regulation. Journal of Banking and Finance, 31, 3680-97.