Effects of Heterogeneity on Measuring Efficiency Scores: The Case of China’s Banking Sector

Yizhe Dong, Douglas Cumming, Alessandra Guariglia, Wenxuan Hou and Edward Lee

Chapter 3 in Experiences and Challenges in the Development of the Chinese Capital Market, 2015, pp 37-67 from Palgrave Macmillan

Abstract: Abstract Banks play a central role in the financial system and also in the real economy, as the 2008 financial crisis has vividly illustrated. The measurement of banking performance has gained importance for both policy makers and practitioners in relation to their decision making. Hence, empirical assessment of the efficiency of banking institutions has received considerable attention in the banking literature (see Berger and Humphrey, 1997; Berger, 2007; Fethi and Pasiouras, 2010 for a comprehensive review of banking efficiency studies). However, efficiency measures can vary substantially across different samples and empirical specifications, which may limit the use of efficiency measures by decision makers. Some previous studies (e.g., Bauer et al., 1998; McKillop et al., 2005; Bos et al., 2009) have compared the efficiency of financial institutions which is obtained using different approaches or specifications. They reported that efficiency scores vary considerably across different models. Therefore, choosing an appropriate frontier model is very important for measuring banking efficiency.

Keywords: Efficiency Score; Stochastic Frontier; Foreign Bank; Stochastic Frontier Model; Cost Frontier (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:pal:palchp:978-1-137-45463-8_3

Ordering information: This item can be ordered from
http://www.palgrave.com/9781137454638

DOI: 10.1057/9781137454638_3

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().