Does Risk-Taking Behaviour Matter for Bank Efficiency?

Florence Chepngenoh, Peter W Muriu and Asian Institute of Research

No n7r2c, OSF Preprints from Center for Open Science

Abstract: In pursuit of financial intermediation between borrowers and savers banks are exposed to various risks which affect efficiency. Using annual panel data for the period 2010 to 2019, this paper investigates the influence of risk-taking behaviour on bank efficiency in a developing economy. Data envelopment analysis technique was used to obtain the profit efficiency scores of each bank and Tobit regression to estimate the impact of various components of bank risks on profit efficiency. Estimation results established that credit and liquidity risks, significantly influence bank efficiency. Therefore, banks should maintain quality assets and a stable liquidity position as they significantly impact on efficiency.

Date: 2020-12-12
New Economics Papers: this item is included in nep-ban, nep-eff and nep-rmg
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:osf:osfxxx:n7r2c

DOI: 10.31219/osf.io/n7r2c

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