US banks efficiency after global financial crisis: Transient and persistent decomposition

Giancarlo Ferrara and Konstantinos E. Kounetas

The North American Journal of Economics and Finance, 2024, vol. 72, issue C

Abstract: The Global Financial Crisis creates liquidity shocks, banks failures and a global economic downturn while led to significant supervisory and regulatory reforms affecting banks efficiency performance. We offer new insights investigating overall inefficiency and by decomposing into transient and persistent components. Using a panel data on 5698 US banks during the period 2010–2016, this study incorporates the measure of both transient and persistent production and cost inefficiency. We find that persistent efficiency seems to be more important for both specifications, as it accounts for 32% (for the production) and 39% (for the cost function) of the inefficiency comparing with the transient part. We argue that most of banks faced increasing returns to scale in production and cost, independently from ownership and size dimension.

Keywords: Production/cost function; Financial crisis; US banks; Efficiency; Transient and persistent (search for similar items in EconPapers)
JEL-codes: C23 D24 G21 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:72:y:2024:i:c:s1062940824000408

DOI: 10.1016/j.najef.2024.102115

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