X‐Efficiency and Productivity Change in Australian Banking

Neal, Penelope Nancy

doi:10.1111/j.1467-8454.2004.00223.x

Cited by 87 publications

(62 citation statements)

References 10 publications

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“…There finding is that productivity growth in European banking has been largely brought about by technological change rather than efficiency improvement. Outside Europe, Worthington (1999) found that Australian Credit Unions exhibited strong technological progress after deregulation and Neal (2004) found that productivity improvements were mostly shifts in the frontier with the majority of banks having negative catch-up over 1995-99.…”

Section: Figurementioning

confidence: 99%

Nonperforming Loans and Productivity in Chinese Banks, 1997-2006

Matthews

Guo

Zhang

2009

The Chinese Economy

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This study examines the productivity growth of the nationwide banks of China over the ten years to 2006. Using a bootstrap method for the Malmquist index estimates of productivity growth are constructed with appropriate confidence intervals. The paper adjusts for the quality of the output by accounting for the non-performing loans on the balance sheets and test for the robustness of the results by examining alternative sets of outputs. The productivity growth of the state-owned banks is compared with the Joint-stock banks and it determinants evaluated. The paper finds that average productivity of the Chinese banks improved modestly over this period. Adjusting for the quality of loans, by treating NPLs as an undesirable output, the average productivity growth of the state-owned banks was zero or negative while productivity of the Joint-Stock banks was markedly higher. the advantage of being able to decompose productivity growth into technological change, which captures any expansion in the production frontier, from efficiency improvement, which captures the movement towards the efficient frontier. One of the problems associated with this approach is that it is constructed within the framework of Data Envelope Analysis (DEA), which in turn is a non-parametric linear programming method that applies observed input and output data to create a 'best practice' frontier. A further problem with the use of DEA is that it does not account for the quality of the output of a bank, which will depend to some extent on the number non-performing loans on its book. KeywordsThis research has three objectives. First, it aims to measure the productivity of the nationwide operating banks in China. Second, it considers non-performing loans as an undesirable output. Third, it addresses the problem of inference inherent in the use of DEA as a measure of relative performance. The main drawback of the DEA approach is that it assumes the inputs and outputs are measured without error and therefore do not permit statistical evaluation. This paper provides an inferential capability to the point-estimates of productivity through the use of non-parametric bootstrapping methods.This paper is organized on the following lines. The next section outlines the background to the Chinese banking system. Section 3 discusses the methodology and

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Section: Figurementioning

confidence: 99%

Nonperforming Loans and Productivity in Chinese Banks, 1997-2006

Matthews

Guo

Zhang

2009

The Chinese Economy

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“…However, based on the current literature, studies on the relationship between stock return and bank performance are limited. Although, there is only one study focused on such a relationship in the case of Australian banking, but there are a number of studies that use DEA based models to examine the performance of Australian banking (Avkiran, 2004;Kirkwood & Nahm, 2006;Neal, 2004). However, as Paul and Kourouche (2008) explained the studies that have focused on banking efficiency are limited and all have applied input oriented DEA to data relating primarily to the pre-Willis period.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Additionally, caused by compulsory superannuation Australia has the 4th largest pension fund pool in the world which highlights the role of banking industry in this country. Due to this key position, measuring banks and financial institutions' performance is an issue of major interest for academics and policy makers (e.g., Avkiran, 1999Avkiran, , 2000Avkiran, , 2004Kirkwood & Nahm, 2006;Moradi-Motlagh, Saleh, Abdekhodaee, & Ektesabi, 2011;Neal, 2004;Paul & Kourouche, 2008;Sathye, 2001Sathye, , 2002Sturm & Williams, 2004;Walker, 1998;Wu, 2008).…”

Section: Introductionmentioning

confidence: 99%

The Information Risk in the Latest Crisis: A Driver or a Driven Factor for Global Financial Markets Equilibrium?

Mantovani

Bertinetti

2011

SSRN Journal

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“…In this study we will follow the production approach. The production approach is followed by many such as in recent study for (Sathye, 2001;Neal, 2004).…”

Section: Methodsmentioning

confidence: 99%

Banking Efficiency in Lebanon: An Empirical Investigation

Zreika¹

2011

Journal of Social Sciences

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Problem statement:The main goal behind this study is to identify whether banks are working at full efficiency or not and spot the changes in efficiency for banks operating in Lebanon after 2007 financial crisis. Approach: This study was conducted to examine the technical efficiency of 40 banks operating in Lebanon over the two sub-periods 2002-2006and 2006. Results: The results from DEA show that the extent of technical efficiency varies across the banks. Citibank, HSBC, BBAC, IBL and FBL are found to be working at fully technical efficiency, while RBA, HBA, BCN, SGBL, BLA and SLCB are found to be prominently inefficient. Technical efficiency is the highest in large banks and lowest in small banks. Conclusion: After 2007 financial crisis, foreign banks have suffered more with technical efficiency decreasing in foreign banks, while local banks had a significant increase in technical efficiency. Small and medium banks are found to be working at increasing returns to scale, while large banks are working at decreasing returns to scale.

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X‐Efficiency and Productivity Change in Australian Banking

Cited by 87 publications

References 10 publications

Nonperforming Loans and Productivity in Chinese Banks, 1997-2006

Nonperforming Loans and Productivity in Chinese Banks, 1997-2006

The Information Risk in the Latest Crisis: A Driver or a Driven Factor for Global Financial Markets Equilibrium?

Banking Efficiency in Lebanon: An Empirical Investigation

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