Efficiency in Banking: Empirical Evidence from the Savings ... - Ivie

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Resti, A., (1997), ‘Evaluating the cost-efficiency of the Italian Banking system: What can be learned from the joint application of parametric and non-parametric techniques’, Journal of Banking and Finance, Vol. 21, 221-250. Revell, J. (1989), The Future of Savings Banks: A Study of Spain and the Rest of Europe, Institute of European Finance, Research Monographs in Banking and Finance no. 8, (University of Wales, Bangor, UK: Institute of European Finance) Sealey, C. and J.T. Lindley, (1977), ‘Inputs, outputs and a theory of production and cost at depository financial institution’, Journal of Finance 32, 1251-1266. Spong, K., R.J. Sullivan and R. DeYoung, (1995), ‘What makes a bank efficient? - A look at financial characteristics and bank management and ownership structure’, FRB of Kansas City Review, December, 1-19. Stevenson, R.E., (1980), ‘Likelihood functions for generalised stochastic frontier estimation’, Journal of Econometrics, 13, 57-66. Tolstov, G.P. (1962), Fourier Series, (London: Prentice-Hall Int.). Vennet, R.V., (1998), ‘Cost and profit dynamics in financial conglomerates and universal banks in Europe’, paper presented at the SUERF/CFS Colloquim, Franfurt, 15-17 October White, H, (1980), ‘Using least squares to approximate unknown regression functions’, International Economic Review, vol. 21, pp. 149-170. 26
Table 1 Descriptive statistics of the outputs and input variables used in the model, 1989-1996 * Variables Description Mean StDev Min Max TC Total cost (operating and financial cost) 138.2 437.1 0.6 9407.5 (ECU m) P 1 Price of labour (%) (total personnel 0.015 0.005 0.001 0.049 expenses/total assets) P 2 Price of funds (%) (total interest 0.051 0.016 0.019 0.246 expenses/total funds (demand, saving, time inter-bank deposits, long-term debt, subordinated debt and other)) P 3 Price of physical capital (total 0.472 0.166 0.062 0.992 depreciation and other capital expenses/total fixed assets) Q 1 The ECU value of total aggregate loans 1007.0 2648.9 3.6 45481.0 (all types of loans) (ECU m) Q 2 The ECU value of total aggregate 790.2 3144.9 2.1 88368.6 securities (short term investment, equity and other investments and public sector securities) (ECU m) Q 3 The ECU value of the off-balance sheet 261.0 3714.0 0.0 159290.0 activities (nominal values) (ECU m) Number of observations: 4,083 * The figures have been deflated using country specific GDP deflators with 1996 as a base year. 27
Page 1 and 2: Efficiency in Banking: Empirical Ev
Page 3 and 4: which have to stand up to competiti
Page 5 and 6: underlying cost functions, whereas
Page 7 and 8: decomposed into changes in pure tec
Page 9 and 10: (1977) and Meeusen and van den Broe
Page 11 and 12: distort scale economy measurements
Page 13 and 14: lnP l = the natural logarithm of it
Page 15 and 16: Within sample scale economies are c
Page 17 and 18: optimal bank size appears to be ine
Page 19 and 20: orientation to profit. The first mo
Page 21 and 22: In accordance with Mester's (1996)
Page 23 and 24: References Aigner, D., C. Lovell an
Page 25: Institute of European Finance, Chal
Page 29 and 30: Table 3 Scale economies for Europea
Page 31 and 32: Table 5 Logistic parameter estimate

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