Organizational forms in banking: An empirical investigation of cost efficiency

Grabowski, Richard; Rangan, Nanda; Rezvanian, Rasoul

doi:10.1016/0378-4266(93)90051-e

Cited by 67 publications

(34 citation statements)

References 6 publications

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“…After the introduction of DEA by Charnes et al (1978) and Banker et al (1984) for the purpose of calculating efficiency, banking sector efficiency studies have widely adopted this method to compile their efficiency scores (Andries, 2011;Burki & Niazi, 2010;Casu & Molyneux, 2003;Grabowski et al, 1993;Kenjegalieva et al, 2009;Sharmen & Gold, 1985). Liu et al (2013) showed that the largest application of DEA techniques are reported in the field of banking, based on all research papers published in journals indexed by the Web of Science database from 1978 to 2010.…”

Section: Methodsmentioning

confidence: 99%

“…DEA is the most commonly accepted and widely used technique in banking sector efficiency analysis, mainly due to two reasons (Andries 2011;Burki & Niazi, 2010;Casu & Molyneux, 2003;Grabowski et al, 1993;Kenjegalieva et al, 2009;Sharmen & Gold, 1985). First, DEA does not require a functional form for the production process of the firm (bank) and it is challenging to identify a correct production function when producing intangible services such as that produced by banks.…”

Section: Introductionmentioning

confidence: 99%

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Bank Ownership and Efficiency in Post-conflict Era: Evidence from Sri Lanka

2014

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This paper aims to explore the changes in efficiency of state-owned, domestic private and foreign banks in Sri Lanka after the ending of the 26 year long armed-conflict between the government and ethnic Tamil rebels in 2009. (The Liberation Tigers for Tamil Eelam (LTTE) fought for a separate state called "Tamil Eelam" from 1983 to 2009. Government forces defeated the LTTE rebels in mid-2009 through military operations and capturing all the land belonging to their de facto state for more than a decade.) Data Envelopment Analysis (DEA) along with the bootstrap simulation technique is employed to derive bank-wise efficiency scores. Two approaches, namely the intermediation and operating approaches, are used to measure the efficiency of banks and to analyse banking performance from multiple perspectives. The results show that, under the intermediation approach, in general state-owned banks were less efficient than domestic private banks in 2009 and 2010, but the relative efficiency of state-owned banks improved in 2011 and 2012 surpassing both domestic private and foreign banks. In contrast our results reveal that under the profit-oriented operating approach, state-owned and foreign banks show superior average efficiency than domestic private banks. The findings reflect the strong positioning of state-owned banks, in line with the post-conflict economic expansion of Sri Lanka, in providing efficient banking services.

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Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Bank Ownership and Efficiency in Post-conflict Era: Evidence from Sri Lanka

2014

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“…The first category of studies uses Single Stage Analysis-see Fig. 1 for a flow chart of a typical single stage analysis (e.g., Ferrier and Lovell 1990;Elyasiani and Mehdian 1992;Yue 1992;Grabowski et al 1993;Fukuyama 1993;Zaim 1995;Pastor et al 1997;Barr et al 1993;Lozano-Vivas et al 2002).…”

Section: Landscape Of Research On Efficiency Assessment In Bankingmentioning

confidence: 99%

“…With respect to the type of assessment perspective, which drives the choices of inputs and outputs, we classify the literature into six categories; namely, the intermediation approach or perspective (e.g., Rangan et al 1988;Ferrier and Lovell 1990;Charnes et al 1990;Mehdian 1990, 1992;Aly et al 1990;Yue 1992;Grabowski et al 1993;Fukuyama 1993;Zaim 1995;Favero and Papi 1995;Miller and Noulas 1996;Taylor et al 1997;Chen 1998;Drake et al 2006;Liu 2018), the asset approach (e.g., Favero and Papi 1995), the production approach (e.g., Drake et al 2006;Liu and Tone 2008), the value added approach (e.g., Bhattacharyya et al 1997;Pastor et al 1997;Chu and Lim 1998;Pastor 2002;Das and Ghosh 2006), the profit-oriented approach (e.g., Berger and Mester 2003;Drake et al 2006;Liu and Tone 2008), and the user cost approach (e.g., Hancock 1985a, b;Fixler and Zieschang 1992).…”

Section: Landscape Of Research On Efficiency Assessment In Bankingmentioning

confidence: 99%

Assessing efficiency profiles of UK commercial banks: a DEA analysis with regression-based feedback

Ouenniche

Carrales

2018

Ann Oper Res

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Data envelopment analysis (DEA) has witnessed increasing popularity in banking studies since 1985. In this paper, we propose a new DEA-based analysis framework with a regression-based feedback mechanism, where regression analysis provides DEA with feedback that informs about the relevance of the inputs and the outputs chosen by the analyst. Unlike previous studies, the DEA models used within the proposed framework could use both inputs and outputs, only inputs, or only outputs. So far, the UK banking sector remains relatively under researched despite its crucial importance to the UK economy. We use the proposed framework to address several research questions related to both the efficiency of the UK commercial banking sector and DEA analyses with and without regression-based feedback. Empirical results suggest that, on average, the commercial banks operating in the UK-whether domestic or foreign-are yet to achieve acceptable levels of overall technical efficiency, pure technical efficiency, and scale efficiency. On the other hand, DEA analyses with and without a linear regression-based feedback mechanism seem to provide consistent findings; however, in general DEA analyses without feedback tend to over-or under-estimate efficiency scores depending on the orientation of the analyses. Furthermore, in general, a linear regression-based feedback mechanism proves effective at improving discrimination in DEA analyses unless the initial choice of inputs and outputs is well informed.Keywords Data envelopment analysis · Efficiency · UK commercial banks · DEA models without explicit inputs · DEA models without explicit outputs

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“…For instance, Ferrier and Lovell (1990), Elyasiani and Mehdian (1992), Grabowski et al (1993) and Alam (2001), among others, use the Data Envelope Analysis (DEA) approach to assess the production performance of U.S. commercial banks relative to several best practiced frontiers. The empirical findings of these studies suggest that the overall efficiency of the U.S. banking industry ranged from 65% to 90% in the 1980s and 1990s.…”

Section: Prior Studies On the Impact Of Globalisation And Performancementioning

confidence: 99%

The Impact Of Globalization On The Performance Of Commercial Banks In Nigeria: A Long –Run Equilibrium Analysis

Okanta¹

2017

ABR

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The research examined the effects of globalization on the performance of Nigerian Commercial banks between 1986 and 2015. Specifically, the research accomplished this task using proxies such as foreign private investment policy, foreign trade policy and exchange rate policy to represent globalization, and using profits before taxes as a proxy for commercial banks' performance. The research employed panel data econometrics in a pooled regression, utilizing autoregressive (dynamic) models in which time series observations were estimated. Tests of model adequacy and normality of residuals, including the test of heteroskedasticity were conducted. The t and F statistics, Durbin-Watson and Breusch-Godfrey tests for the overall significance of the estimated regression and serial autocorrelation first-order were also conducted. Variance decomposition test of the banks' profits before taxes was carried out to establish (for the next 10-year period) the short-run equilibrium swings of the banks' future performance shocks and the ability to recover from the shocks. The results of econometric regression analyses confirmed the following: The autoregressive models were adequate (i.e. they were stable); that is, the model variables and residuals were normally distributed and equally spread (homoscedasticity).There were no first-order serial autocorrelation, a confirmation of the overall significance and non-spuriosity of the findings of the research. In all, foreign private investment and exchange rates had positive and significant effects on the current profits before taxes of commercial banks in Nigeria. However, foreign trade policies had less positive and significant effects on bank performance in Nigeria in the past 30 years; and the 10-year period variance decomposition of the variables showed that the banks would face their own short-run shocks 100% in the first-year period and recover at zero percent in the same year. However, they would face 42.4% of such a shock and recover about 58% of it in the 10 th year. The research recommended greater integration of banks in Nigeria to the global community for greater business earnings. INTRODUCTIONRecently, there has been a lot of clamour toward making the world a great village. Also, there have been intense efforts to make the world a global charity. For instance, in the field of technology the world has become a global village due to the invention of communication and information technology. You cannot imagine where someone in Nigeria sends a message to another in Germany or United State of America and receives instant respond. You cannot imagine where a football match being played in one country can be instantly witnessed by over three hundred million people, scattered all over the world, through electronic means. You cannot imagine how goods produced in a particular country can be consumed in far away countries. This is the same with the banking industry. Imagine where someone in one continent transacts with another in a different continent and makes payment throug...

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Organizational forms in banking: An empirical investigation of cost efficiency

Cited by 67 publications

References 6 publications

Bank Ownership and Efficiency in Post-conflict Era: Evidence from Sri Lanka

Bank Ownership and Efficiency in Post-conflict Era: Evidence from Sri Lanka

Assessing efficiency profiles of UK commercial banks: a DEA analysis with regression-based feedback

The Impact Of Globalization On The Performance Of Commercial Banks In Nigeria: A Long –Run Equilibrium Analysis

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