The Impact of Non-Performing Loans on Bank's Operating Efficiency for Taiwan Banking Industry

Chiung-Ju Liang (), Ming-Li Yao (), Dar-Yeh Hwang () and Wei-Hsiung Wu ()
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Chiung-Ju Liang: Department of Business Administration, National Taiwan University of Science and Technology, Taiwan
Ming-Li Yao: Department of Business Administration, National Taiwan University of Science and Technology, Taiwan
Dar-Yeh Hwang: Department of Finance, National Taiwan University, Taipei, Taiwan
Wei-Hsiung Wu: Department of Finance, National Taiwan University, Taipei, Taiwan

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2008, vol. 11, issue 02, 287-304

Abstract: The DEA model is applied to analyze the operational efficiency of Taiwan's publicly-listed banks to reveal the influence of the rising non-performing loan ratio (NPLR) on Taiwan's banking industry. After taking into account the NPLR and the different classifications of banks, the respective performances of different types of banks exhibit the following variations and characteristics: the originally more-efficient new private banks significantly fell behind the old public banks in terms of efficiency scores after the NPLR was included. The old private banks' operational efficiency fell behind that of the other banks at all times. The productivity of all new private banks exceeded that of the other banks.

Keywords: Operational efficiency; super-efficiency; NPLR; DEA (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2008
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DOI: 10.1142/S0219091508001350

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