Measuring Bank Profit Efficiency

Trevor Fitzpatrick and Kieran McQuinn

No 3/RT/05, Research Technical Papers from Central Bank of Ireland

Abstract: This paper proposes that a variant of the Battese and Coelli (1995) inefficiency model can be applied as a consistent and unifying framework in exploring the determinants of credit institutions’ profit inefficiency scores. To date, work concerned with the potential determinants of credit institutions' profit inefficiency levels has addressed the issue in either a single-step or multi-step process. In the former, inefficiency scores are conditioned by region and bank-specific indicators, while in the latter, generated inefficiency scores are subsequently regressed on a set of potential correlates. The approach proposed here allows these issues to be explored jointly in a statistically consistent manner. The model is applied to a sample of banks from Ireland, the UK, Canada and Australia.

JEL-codes: D24 G21 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2005-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Measuring bank profit efficiency (2007)
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