The effect of building society demutualisation on levels of efficiency at large UK commercial banks

Robert Webb, Cormac Bryce and Duncan Watson

Journal of Financial Regulation and Compliance, 2010, vol. 18, issue 4, 333-355

Abstract: Purpose - This paper aims to investigate the effect of UK building society demutualisation on levels of efficiency at the largest five commercial banks in the UK. Design/methodology/approach - This research utilises data envelopment analysis (DEA) within a rarely adopted windows framework to analyse efficiency. The study also incorporates a novel risk proxy in the profit‐orientated approach to determine DEA input/output which proves a useful innovation to the methodology. Findings - The overall aggregate results suggest that converting building societies outperformed their bank counterparts in all areas of efficiency and that scale efficiency dominates pure technical efficiency. Interestingly, the results also indicate that the level at which institutions continue to find economies of scale had increased when compared to previous research. Originality/value - The period of building society demutualisation offers an empirical opportunity to examine deregulation upon market participants. It is felt that this study offers academics, regulators and participants within the financial services environment an insight into the efficiency impact of deregulation.

Keywords: Banking; Building societies; Performance management; Data analysis (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrcpp:v:18:y:2010:i:4:p:333-355

DOI: 10.1108/13581981011093668

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