Determinants of Bank Efficiency: the Case of Brazil

Patricia Tecles and Benjamin Tabak

No 210, Working Papers Series from Central Bank of Brazil, Research Department

Abstract: This paper analyzes the efficiency of the Brazilian banking sector over the post-privatization period of 2000-2007. We employ a Bayesian stochastic frontier approach, which provides exact efficiency estimates and confidence intervals and thus, allows an accurate comparison across institutions and bank groups. The results suggest that large banks are the most cost and profit efficient, supporting the concentration process observed in recent years. Foreign banks have achieved a good performance through either the establishment of new affiliates and the acquisition of local banks. The remaining public banks have had improvements in cost efficiency, but are relatively profit inefficient. Finally, we observe a positive impact of capitalization on efficiency.

Date: 2010-05
New Economics Papers: this item is included in nep-ban, nep-eff and nep-lam
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Citations: View citations in EconPapers (62)

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Journal Article: Determinants of bank efficiency: The case of Brazil (2010)
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