Parametric Meta-Technology Frameworks to Study Technical Efficiency and Macro-Economic Effects in the European Banking System

Abstract

Vizja Press&IT www.ce.vizja.pl 73Bank efficiency scores usually serve as a tool for comparing institutions with each other while allowing us to quantify sub-optimal decision-making unit choices. In the case of inter-country comparisons, such differences can also arise because of macro-economic heterogeneity between countries. Previous studies estimated a common technology limit for a sample of banking institutions in different countries. The contribution of our paper is that we employ a parametric approach to specify metafrontiers and to study the effect of macro-economic heterogeneity on banking technology development. First, we use a parametric directional distance function to specify the appropriate technology frontier for each nation and the meta-technology frontier that includes all country-specific frontiers. Then, we define the directional technology gap ratio referring to the inefficiency scores evaluated from meta-technology and country-specific technology frontiers. The estimated parameters are more significant in our model than in the general model, also called the common frontier model. Comparing the results of our model to those of common frontiers, we find a substantial variation not only in inefficiency scores but also in countries' rankings. While resorting to a pooled linear regression model, we demonstrate that the assessed technology gap ratio exhibits a significant association with inflation rates and per capita GDP. This result proves the influence of macro-economic heterogeneity on banks' efficiency and technological development. IntroductionThe banking sector has basic responsibilities in any economy. It keeps the savings of different economic agents and finances business and trade projects in all sectors. Moreover, several researchers have demonstrated that the efficiency of financial institutions has a significant effect on economic growth, whereas others confirmed that bank insolvencies could be a result of economic crises, which has undesirable consequences for the whole economy. As a conse-

Kırgızistan’da Ticari Bankaların Maliyet Etkinliğini Etkileyen Faktörler

“…Makroekonomik ve bankacılık sektörel faktörlerin bankaların maliyet etkinliğini etkilediği varsayılarak ve yazındaki bazı çalışmalar izlenerek etkinlik ölçülerindeki sapmaların azaltılması için (Jarraya, 2014) GSYİH'nın yıllık büyüme oranı (GDP_GRW) (Mamonov, 2013;Kasman ve Carvallo, 2013;Goddard vd., 2014:141); bağlantılı ülkelerdeki gelişmelerin etkisini, döviz piyasası durumunu ve döviz kuru riskini belirli bir ölçüde yatsıttığı varsayılarak ve ABD dolarının değişim kurunun standart sapması (STDEV_FX) (Mamonov, 2013); rekabetteki değişimleri yansıttığı varsayımı temel alınarak bankaların uyguladıkları kredi ve mevduat faiz oranları arasındaki farkı (SPREAD) (Drakos, 2003;Quagliariello, 2007;Huang vd., 2014) tahmin edilen modele kontrol edilemeyen (dışsal) değişkenler olarak dahil edilmiştir. Veriler ticari bankalarca gazetelerde ve resmi internet sitesilerinde yayınlanmış bilanço ve gelir tablosundan temin edilmiştir.…”

Shadow prices of non-performing loans and the global financial crisis

“…The directional distance function offers a full characterization of the technology and enables banks to simultaneously reach the maximum increase of outputs and decrease of inputs (Chambers et al, 1996;Färe et al, 2005;Hachicha and Jarraya, 2010;Jarraya, 2014) .…”

How Much Technically Efficient Is The South Asian Region? An Intra-Regional Comparison Among Its Affiliates

“…In general, there are several studies like Adkins et al (2002), Milner and Weyman-Jones (2003), Gust and Marquez (2004), Jayasuriya and Wodon (2005), Kneller and Stevens (2006), Thompson and Garbacz (2007), Repkine (2008), Henry et al (2009), Dimelis and Papaioannou (2011), Jarraya (2014), Lemonakis et al (2016), and Gkypali et al (2019), which have performed cross-country analysis of productive efficiency and tried to identify various factors affecting efficiency. However, in the context of South Asian region, although profuse literature focused on economic growth aspect (e.g., Devarajan & Nabi, 2006; Sahoo & Dash, 2012; Rahman et al, 2019; Rosegrant & Evenson, 1992) yet there is hardly any study specific to South Asia that analyzed intercountry and intertemporal productive efficiency in the region to the best of our knowledge.…”