An empirical study of bank efficiencies and technology gaps in european banking

Tai Hsin Huang, Li Chih Chiang, Kuan Chen Chen

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16 Citations (Scopus)

Abstract

This paper extends the established literature on modeling the cost structures of Europe's banking sectors by combining the Fourier flexible cost function with time-varying technical efficiency (TE) under the framework of the meta-frontier, as proposed by Battese etal. (Journal of Productivity Analysis, Vol. 21 (2004), pp. 91-103) and O'Donnell etal. (Empirical Economics, Vol. 34 (2008), pp. 231-255). We find multiple technologies prevail in the nine sample countries, justifying the use of the meta-cost frontier. Measures TE and technology gap ratios are found to be positively correlated with each other, implying that a relatively technically efficient bank is possibly technologically efficient and vice versa.

Original languageEnglish
Pages (from-to)839-860
Number of pages22
JournalManchester School
Volume79
Issue number4
DOIs
Publication statusPublished - Jul 2011
Externally publishedYes

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ASJC Scopus subject areas

  • Economics and Econometrics

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