Efficiency and Foreign Ownership in Banking: An International Comparison

Adnan Kasman (), Saadet Kirbas Kasman () and Oscar Carvallo ()
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Adnan Kasman: Department of Economics, Faculty of Business, Dokuz Eylül University
Saadet Kirbas Kasman: Department of Economics, Faculty of Business, Dokuz Eylül University

No 05/03, Discussion Paper Series from Dokuz Eylül University, Faculty of Business, Department of Economics

Abstract: This paper estimates cost and profit efficiency for Latin American and the Caribbean banking sectors. This study also conducts a comparative analysis of the performance of foreign and domestic banks operating in these counties. Using a model proposed by Battese and Coelli (1995), a common cost and profit frontiers with country-specific environmental variables have been estimated for a panel of 427 banking firms from sixteen countries. The empirical analysis reveals the importance of the environmental variables in explaining the efficiency differences among countries. The results show that profit efficiency levels are well below those corresponding to cost efficiency, implying that the most important inefficiency is on the revenue side. The results further indicate that on average foreign banks are more efficient than domestic banks.

Keywords: Banking; efficiency; foreign ownership (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2005-11-23, Revised 2005-11-23
New Economics Papers: this item is included in nep-ban, nep-com, nep-eff, nep-fin and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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