A Geographically Weighted Approach in Measuring Efficiency in Panel Data: the Case of US Saving Banks

Benjamin Tabak, Rogério Miranda and Dimas Fazio

No 275, Working Papers Series from Central Bank of Brazil, Research Department

Abstract: The objective of this article is to discuss a new approach to control for the environment when one estimates efficiency by the stochastic frontier model. By introducing geographical weights and estimating local frontiers for each US saving bank for 2001-09, we find that bank technical performance is higher for most banks in comparison to a fixed-effects approach. This result highlights the importance of explicitly considering local environment and constraints while analyzing banks' behavior. All in all, this model has been proved very promising and viable for future empirical studies.

Date: 2012-04
New Economics Papers: this item is included in nep-ban and nep-eff
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Citations: View citations in EconPapers (4)

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Journal Article: A geographically weighted approach to measuring efficiency in panel data: The case of US saving banks (2013)
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