Mergers and technical efficiency in Spanish savings banks: A stochastic distance function approach

Cuesta, Rafael Álvarez; Orea, Luis

doi:10.1016/s0378-4266(01)00184-4

Cited by 113 publications

(94 citation statements)

References 42 publications

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“…13 The median share of bonuses is 3.2% of total costs and 6.9% on operational profits. 14 Cuesta and Orea (2002) also augment the intermediation approach by including non-interest income as an output to control for off-balance sheet activities. The managers we interviewed also considered commission income as an essential measure of bank output.…”

Section: The Estimation Equation For Our Fixed Effects Specification Ismentioning

confidence: 99%

The effects of general and firm-specific training on wages and performance: evidence from banking

Jones

Kalmi

Kauhanen

2011

Oxford Economic Papers

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By using new panel data for Finnish banks we study the impact of training on wages and performance. To the best of our knowledge, ours is the first paper to compare explicitly the effects of general and firm-specific workplace training on outcomes for both employees and firms. Unlike much existing literature, we find stronger evidence that training improves worker outcomes rather than organizational performance. Depending upon specification, the estimated wage elasticity with respect to training is in the range of 3-7%, whereas the performance effects vary widely depending on the measures of training intensity. The other key finding is that general training is associated with higher wage and performance effects than is firm-specific training. 2 I IntroductionTwo important issues are raised in most economic studies of training. First, does training increase efficiency and by how much? Second, who reaps the gains from training? In addressing these issues, the standard (Beckerian) theory concludes that in competitive markets, employers will not pay for general training. By definition, general training increases employee productivity by the same amount in the current workplace and elsewhere. If employees participate in general training, their employers have to bid up employees' wages reflecting the productivity increases due to training. If they fail to do so, other potential employers can "poach" these workers and free-ride in training expenses. Hence, according to this theory, in competitive labour markets, employers would finance training only if there are some specific elements in it. By contrast, the early empirical evidence on training revealed that employer-provided training is mostly general in nature and that, nevertheless, employers paid the costs of training (e.g. Lynch 1992; Spletzer, 1998, 1999;Barron et al. 1999).To explain this inconsistency between theory and empirics, many subsequent theorists point to imperfections in labour markets. It is argued (e.g. Acemoglu and Pischke, 1999;Manning, 2003) that search frictions, certain labour market institutions (e.g. unions, minimum wages), imperfect competition in small labour markets (Stevens 1994), or asymmetric information in training among current and potential employers may lead to situations where employees capture only a fraction of the productivity gains.These models also imply that wages do not equal marginal revenue product, and this has motivated recent literature that studies the impact of training on productivity and wages 1 .Consistent with theory grounded in imperfect labour markets, more recent empirical 1 For theoretical literature see e.g. Acemoglu and Pischke (1999) and Booth and Zoega (2004). 3 evidence on the impact of training on wages and productivity finds that there is a wedge between wages and productivity effects and that employees and employers seem to share the benefits from training. This applies both to industry levels studies (Conti 2005;Dearden et al. 2006) and firm level studies (e.g. Ballot et al. 2006). However, w...

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Section: The Estimation Equation For Our Fixed Effects Specification Ismentioning

confidence: 99%

The effects of general and firm-specific training on wages and performance: evidence from banking

Jones

Kalmi

Kauhanen

2011

Oxford Economic Papers

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“…They find that merged banks are able to recover very fast their efficiency levels and present higher efficiency than non-merged institutions due to lower adjustment costs. Cuesta and Orea (2002) had also found a similar pattern in merged Spanish banks after evaluating output-oriented technical efficiency. Here, we find that these effects are even more evident when we assess integrally costs and revenues in a profit efficiency analysis.…”

Section: Analysis Of Efficiencymentioning

confidence: 54%

Heterogeneous Effects of Risk-Taking on Bank Efficiency: A Stochastic Frontier Model with Random Coefficients

Sarmiento

Galán

2014

SSRN Journal

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We estimate a stochastic frontier model with random inefficiency parameters, which allows us not only to identify the role of bank risk-taking on driving cost and profit inefficiency, but also to recognize heterogeneous effects of risk exposure on banks with different characteristics. We account for an integral group of risk exposure covariates including credit, liquidity, capital and market risk, as well as bank-specific characteristics of size and affiliation. The model is estimated for the Colombian banking sector during the period 2002-2012. Results suggest that risk-taking drives inefficiency and its omission leads to over (under) estimate cost (profit) efficiency. Risk-taking is also found to have different effects on efficiency of banks with different size and affiliation, and those involved in mergers and acquisitions. In particular, greater exposures to credit and market risk are found to be key profit efficiency drivers. Likewise, lower liquidity risk and capital risk lead to higher efficiency in both costs and profits. Large, foreign and merged banks benefit more when assuming credit risk, while small, domestic and non-merged banks institutions take advantage of assuming higher market risk.

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“…Together, both attempts imply profit efficiency. By omitting the revenue side, we provide a partial, and probably misleading, view of bank performance, although some relatively recent initiatives such as Cuesta and Orea (2002), Rezitis (2008) and Feng and Serletis (2010) have attempted to fix this gap in the literature, by considering output orientations. We will expand further on this below.…”

Section: Introductionmentioning

confidence: 99%

“…If the analysis is confined to revenue efficiency, the existing literature on applications to the banking sector is rare, but existent (Cuesta and Orea, 2002;Rezitis, 2008;Feng and Serletis, 2010). In contrast, the number of studies that have analyzed bank profit efficiency using econometric techniques is remarkably higher.…”

Section: Introductionmentioning

confidence: 99%

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Costs, revenues and performance in Spanish banking: a comparative analysis of pre- and early crisis years

Prior

Tortosa‐Ausina

García-Alcober

et al. 2016

Spanish Journal of Finance and Accounting / Revista Española de

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Mergers and technical efficiency in Spanish savings banks: A stochastic distance function approach

Cited by 113 publications

References 42 publications

The effects of general and firm-specific training on wages and performance: evidence from banking

The effects of general and firm-specific training on wages and performance: evidence from banking

Heterogeneous Effects of Risk-Taking on Bank Efficiency: A Stochastic Frontier Model with Random Coefficients

Costs, revenues and performance in Spanish banking: a comparative analysis of pre- and early crisis years

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