IMPACTS OF THE ECONOMIC COOPERATION FRAMEWORK AGREEMENT ON BANKING COST EFFICIENCY IN CHINA AND TAIWAN: A STOCHASTIC METAFRONTIER APPROACH

Yung-Lieh Yang, Tsui-Yueh Cho and Ming-Hsiang Huang

Hitotsubashi Journal of Economics, 2017, vol. 58, issue 2, 121-141

Abstract: This study extends the stochastic metafrontier model (SMF) of Huang, Huang and Liu (2014) to compare the meta-cost banking efficiency in China and Taiwan from 2007 to 2013, and to analyze the impacts on cost efficiency following the implementation of the Economic Cooperation Framework Agreement (ECFA).The empirical tests show that the banking sectors in both China and Taiwan implemented distinct technology-related policies during this period. Following the implementation of ECFA, the meta-cost efficiency for Taiwanʼs banking sectors showed a distinct improvement. Besides, the Chinese banks which had established branches in Taiwan experienced a significant enhancement in meta-cost efficiency. Several managerial insights and implications are discussed.

Keywords: Economic Cooperation Framework Agreement (ECFA); stochastic metafrontier model; cost gap ratio; meta-cost efficiency (search for similar items in EconPapers)
JEL-codes: C23 C51 D24 G21 L11 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjec:v:58:y:2017:i:2:p:121-141

DOI: 10.15057/28951

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