The Relationship Between Bank Efficiency and Stock Returns: Evidence from Asia and Latin America

Ioannidis, Christos; Molyneux, Philip; Pasiouras, Fotios

doi:10.2139/ssrn.1325807

Cited by 31 publications

(26 citation statements)

References 63 publications

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“…This shows that the stocks of profit efficient banks tend to outperform that of inefficient banks. These results are consistent with the findings of Ioannidis et al (2008) The explanatory variables (size and risk) to account for the impact of profit efficiency change on the stock returns were not statistically significant for SFA and DEA estimates. This shows that size and risk do not contribute to the explanation of changes in share prices.…”

Section: Resultssupporting

confidence: 90%

Bank efficiency and stock returns

Sarpong¹,

Winful²,

Ntiamoah³

2017

J. Econ. Int. Finance

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Increased competition and globalization have made it imperative for banks to achieve high efficiency in order to generate required returns. This paper investigates the relationship between bank efficiency estimates, derived from both Stochastic Frontier Approach (SFA) and Data Envelopment Analysis (DEA) and share prices of banks listed on the Ghana stock exchange. The results give an indication that changes in cost and profit efficiency are reflected in stock performance and that efficiency is directly observed by the public and reflected in share prices, though SFA efficiency scores are not reflected in share prices as being equally important as compared to DEA efficiency scores.

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Section: Resultssupporting

confidence: 90%

Bank efficiency and stock returns

Sarpong¹,

Winful²,

Ntiamoah³

2017

J. Econ. Int. Finance

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“…The specific findings common to the findings of Chu and Lim (1998), Kirkwood and Nahm (2006), Ioannidis, Molyneux and Pasiouras (2008), Liadaki and Gaganis (2008) are that changes in profit efficiency are statistically significant and positively related to share returns. However, they do not find evidence of a significant relationship between cost efficiency and share returns.…”

Section: Previous Research About Bank Performance and Share Returnsmentioning

confidence: 61%

“…Researchers that focussed on bank performance and share return relationships were inter alia Adenso-Diaz and Gascon (1997), Chu and Lim (1998), Beccalli, Casu and Girardone (2006), Kirkwood and Nahm (2006), Sufian and Majid (2006), Sufian and Majid (2007), Ioannidis, Molyneux and Pasiouras (2008), Liadaki and Gaganis (2008), Muliaman, Maximilian, Hall, Kenjegalieva, Santoso, Satria and Simper (2008), Pasiouras, Liadaki, and Zopounidis (2008) and Thamron (2009).…”

Section: Previous Research About Bank Performance and Share Returnsmentioning

confidence: 99%

Share pricing of South African banking groups - Importance of efficiency and earnings per share

Cronje¹,

Beer²

2010

COC

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Previous research findings indicate that the relevant performance of firms is one way or another, reflected in the market prices of shares. Such research is focussed on different performance components of firm individual risk (FIR), but none of the research segregates systematic and unsystematic risk of the shares to levels where the relative FIR components that were researched could be quantified in proportion to FIR level share price determinants.This brings about the objective of this research to segregate the pricing of shares in terms of market and firm specific factors with the intention to quantify the association of relative bank efficiency and earnings performance with the pricing of South African bank shares. The study draws a parallel between the actual significance of measured efficiency and earnings per share (EPS) with share pricing and quantified FIR. Within this context the comparative significance of measured efficiency and EPS are explored to investigate the Efficient Market Hypothesis (EMH) prevalence. An analysis of efficiency and share price relationships at different financial year time points shows a semi-strong form of the EMH in both the preGlobal Financial Crises (GFC) and GFC periods. This indicates that the application of an active investment strategy by investors based on efficiency measures may be beneficial. The impact of EPS as contributing determinant of share prices increased during the GFC period compared to the pre-GFC period, but reflects a strong form of the EMH.

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“…The evidence revealed that although the market risk is the primary determinant of bank stock returns, interest rate changes have a significant explanatory power for the other portion of variability after the market risk is controlled. Ioannidis, et al (2008) found in their study of the relationship between bank efficiency and stock returns a positive relationship between profit efficiency changes and stock returns. Evidence was gathered from Asia and Latin America.…”

Section: Research Problemmentioning

confidence: 95%

The Effect of Investment in Technology on Lagged Stock Returns of Banks Listed at the Nairobi Securities Exchange

Iraya¹,

Saiti²

2018

IJHSS

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The study sought to establish the relationship between the implementation of technology and lagged bank stock returns of banks listed at the Nairobi Securities Exchange. Information Technology is increasingly important in banking because it is an industry that is information-intensive. Therefore banks included Kenyan banks have invested heavily in new technologies in the industry. The study used a descriptive research design as it is ideal in identification of relationships among variables. A cross-sectional study was adopted as data was collected within the period 2010 to 2015. The indicators of technology in this study are internet banking, mobile banking and Automated Teller Machines commonly known as ATMs. The population of the study was the NSE listed banks as

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The Relationship Between Bank Efficiency and Stock Returns: Evidence from Asia and Latin America

Cited by 31 publications

References 63 publications

Bank efficiency and stock returns

Bank efficiency and stock returns

Share pricing of South African banking groups - Importance of efficiency and earnings per share

The Effect of Investment in Technology on Lagged Stock Returns of Banks Listed at the Nairobi Securities Exchange

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