IS FULL EFFICIENCY ACHIEVABLE? AN EMPIRICAL STUDY OF THE BANKING INDUSTRY IN TAIWAN

Ku‐Hsieh Chen, Jen‐Chi Cheng, Joe‐Ming Lee and Ching‐Fang Chi

Contemporary Economic Policy, 2019, vol. 37, issue 1, 195-209

Abstract: This paper aims to propose a feasible framework for estimating the efficiency of input factors for banks and the adjustment of these factors necessary to achieve full efficiency in the short and long term. Based on a sample of 39 Taiwanese banks during 1999–2011, the framework recommends a scheme along with a set of adjustments empirically that allow the banks to not only achieve full efficiency but also save 10.3% of the total costs in the short term and 8.8% in the long term. This scheme amounts to short‐term and long‐term savings of NT$3.6 billion and NT$3.1 billion, respectively. (JEL C23, D24, G21)

Date: 2019
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