The differing efficiency experiences of banks leading up to the global financial crisis: A comparative empirical analysis from Australia, Canada and the UK

Dong Xiang (), Abul Shamsuddin () and Andrew Worthington

Journal of Economics and Finance, 2015, vol. 39, issue 2, 327-346

Abstract: This paper employs a mixed two-stage approach to estimate and explain differences in the cross-country efficiency of ten Australian, five UK and eight Canadian banks over the period 1988 to 2008 using stochastic distance, cost and profit frontiers. The first stage estimates efficiency scores for banks using a common frontier including uncontrollable environmental factors such as per capita national income, bank concentration, capital adequacy, deposit density and the average profit margin. The second stage investigates how controllable firm-specific factors help explain the differences in efficiency. In line with the experience of the banking sector during the recent global financial crisis, the evidence indicates that Australian banks exhibited superior efficiency. Key factors found to positively affect efficiency include intangible assets and the loans-to-deposits and loans-to-assets ratios. Key factors found to negatively affect efficiency include bank size, loan loss provisions, and financial leverage. Copyright Springer Science+Business Media New York 2015

Keywords: Stochastic frontier analysis; Technical; cost and profit efficiency; Banks; C23; D24; G21 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://hdl.handle.net/10.1007/s12197-013-9258-y (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jecfin:v:39:y:2015:i:2:p:327-346

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/12197/PS2

DOI: 10.1007/s12197-013-9258-y

Access Statistics for this article

Journal of Economics and Finance is currently edited by James Payne

More articles in Journal of Economics and Finance from Springer, Academy of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().