Main determinants of efficiency and implications on banking concentration in the European Union

Mesa, Rafael Bautista; Sánchez, Horacio Molina; Sobrino, Jesús N. Ramírez

doi:10.1016/j.rcsar.2013.08.006

Cited by 19 publications

(4 citation statements)

References 38 publications

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“…Model (1) showed that bank size positively contributes to increasing Pakistan’s banking efficiency as the coefficient (0.327) is statistically positive and significant at a 1 percent level. The positivity of bank size to increase banking efficiency is consistent with [ 114 , 115 ], who stated that bank size is essential for determining banking efficiency.…”

Section: Resultssupporting

confidence: 84%

Efficiency evaluation of commercial banks in Pakistan: A slacks-based measure Super-SBM approach with bad output (Non-performing loans)

et al. 2022

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According to recent figures from the State Bank of Pakistan (SBP), since 2006, commercial banks’ non-performing loans (NPLs) have significantly risen. To this end, the primary objective of this research is to explore the impact of NPLs on the operational efficiency of commercial banks in Pakistan. NPLs were incorporated as bad output in the efficiency estimation of 24 CBs for the period 2006–2017. This study employs the data envelopment analysis (DEA) Super-SBM with the undesirable output for the efficiency evaluation of CBs. To test the robustness of our results, we used two different input-output bundles (model A and model B). The findings show a significant difference exists between the results estimated with and without undesirable output. Furthermore, the results of super-efficiency estimation rank the most efficient CB for the study period and distinguish it from other efficient DMUs. Models A and B show that foreign banks are always more efficient than domestic banks, while private CBs have higher efficiency scores than public CBs in domestic banking. In addition, the big five CBs show mixed findings, as in model A, they were more efficient than other domestic CBs, while in model B were less efficient. In the second stage of the empirical study, we use the system GMM to examine the impact of NPLs, bank size, and net interest margin on CBs efficiency. We discovered that NPLs have a negative and significant effect on banking efficiency, whereas bank size and net interest margin positively affect the efficiency of commercial banks in Pakistan.

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Section: Resultssupporting

confidence: 84%

Efficiency evaluation of commercial banks in Pakistan: A slacks-based measure Super-SBM approach with bad output (Non-performing loans)

et al. 2022

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“…Several external factors that can increase competition to improve the efficiency of the Indonesian banking system include the implementation plan of the ASEAN Economic Community (MEA) in 2015 and the ASEAN Banking Integration Framework (ABIF). Mesa et al (2014) measures the key determinants affecting bank efficiency. Mesa suggested that the bank's efficiency ratio derived from the income statement, positively related to the size of the bank in terms of total assets.…”

Section: Previous Researchmentioning

confidence: 99%

ASEAN Banking Efficiency Review Facing Financial Services Liberalization: The Indonesian Perspective

Syadullah

2018

Asian Development Policy Review

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One of the challenges facing banks in the ASEAN region is the plan to establish the ASEAN Banking Integration Framework (ABIF). The main objective of ABIF is to prepare market access and operational flexibility in ASEAN countries to create Qualified ASEAN Banks (QAB), ie ASEAN banks that meet certain requirements agreed by ASEAN. This paper analyzes the level of bank efficiency in ASEAN member countries, taking samples of banks in Indonesia, Malaysia, Singapore, Thailand, Philippines, and Vietnam, using Data Envelopment Analysis (DEA) method, analysis of financial ratios and comparison of research results with different approaches. The results of the analysis show that although the approach of financial ratios and DEA of Indonesian banks appear efficient, but when analyzed from NIM, the Indonesian banking system is inefficient.Contribution/ Originality: This paper contributes to the policy-making authority of banks in Indonesia.Banking in the ASEAN region will face the ASEAN Banking Integration Framework (ABIF). This paper reviews the efficiency of Indonesian banking as a form of readiness to face ABIF.

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“…The present study employed the following observable variables to carry out adjustments: net interest margin, net interest revenue/average assets, noninterest expense/average assets, dividend payout, cost-to-income ratio, and recurring earning power. Of the research that has analyzed banking efficiency, Bautista Mesa et al and Dietrich and Wanzenried's studies [8,13] can be highlighted. The cited authors indicate in their conclusions that operational efficiency is one of the principal factors determining banks' profitability.…”

Section: Operationsmentioning

confidence: 99%

Modeling the Sustainability of Bank Profitability Using Partial Least Squares

2019

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This study sought to develop a model that can predict banks’ profitability and help the corporate governing bodies of financial institutions to define strategies that address possible adverse scenarios. The partial least squares approach to structural equation model (SEM) was used to process data on the 100 largest banks in the world by volume of assets, between 2011 and 2015, as well as macroeconomic variables of the countries in which the banks were headquartered. A model able to predict the banks’ profitability was created using the latent variables of capital adequacy, operations, asset quality, size, and profile of the countries in which the banks were based. The model also relied on indicators of these concepts, namely, 30 accounting, financial, and economic ratios. The results have important practical implications since they enable banks’ corporate governing bodies to make decisions on issues such as size, location, or solvency and facilitate predictions of banks’ profitability. In addition, the approach applied (i.e., SEM analysis) contributes to improving the methodology used in studies of the banking sector as a result of the information that the proposed model provides.

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Main determinants of efficiency and implications on banking concentration in the European Union

Cited by 19 publications

References 38 publications

Efficiency evaluation of commercial banks in Pakistan: A slacks-based measure Super-SBM approach with bad output (Non-performing loans)

Efficiency evaluation of commercial banks in Pakistan: A slacks-based measure Super-SBM approach with bad output (Non-performing loans)

ASEAN Banking Efficiency Review Facing Financial Services Liberalization: The Indonesian Perspective

Modeling the Sustainability of Bank Profitability Using Partial Least Squares

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