Banking Inefficiency in Central and Eastern European countries under a Quadratic Loss Function

Anastasia Koutsomanoli-Filippaki and Emmanuel Mamatzakis

Discussion Paper Series from Department of Economics, University of Macedonia

Abstract: This paper employs a specification of a quadratic loss function based on forward looking rational expectations to model the underlying dynamics of efficiency scores in the banking industry of eleven Central and Eastern European countries over the period 1998-2005. Results show that there is considerable variation in the adjustment speed to the long run equilibrium across banking systems and over time, while it also appears that the recent accession to the EU has not led to the expected increase in the speed of adjustment to the long run equilibrium. Moreover, banks’ ownership structure appears to assert an influence on the speed at which credit institutions correct their past-period inefficiency.

Keywords: Speed of adjustment; long run equilibrium; rational expectations; banking inefficiency. (search for similar items in EconPapers)
JEL-codes: D24 G21 L25 (search for similar items in EconPapers)
Date: 2008-09, Revised 2008-09
New Economics Papers: this item is included in nep-ban and nep-tra
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Related works:
Journal Article: Banking inefficiency in Central and Eastern European countries under a quadratic loss function (2009)
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