Efficiency and Cost Differences across Countries in a Unified EuropeanBanking Market

Jacob Bikker ()

DNB Staff Reports (discontinued) from Netherlands Central Bank

Abstract: This paper seeks to discover the level and spread of bank efficiency in the EU, which in the light of the current and expected increase in competition in Europe is of vital importance for welfare- related public policy toward market structure and conduct. In particular, this study focuses on differences across countries, variously sized banks (reflecting distinct market segments), various banking categories and over time. Two related but diverging dimensions of efficiency are considered: X-efficiency, measuring managerial ability, and cost level differences, reflecting national economic and institutional conditions with respect to supervisory rules, government interference, customer preferences and level of development. The observed large spreads in inefficiencies and cost levels across countries and individual banks indicate that the process of scaling up and rationalisation to be prepared for increased foreign competition, has - for at least part of the banks - only just begun.

Keywords: banks; efficiency; banking category and size effects; international comparison (search for similar items in EconPapers)
JEL-codes: F36 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec
Date: 2003
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Working Paper: Efficiency and cost differences across countries in a unified European banking market (2001)
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Persistent link: http://EconPapers.repec.org/RePEc:dnb:staffs:87

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