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What Explains Differences in Efficiency Across Russian Banks?

Konstantin Styrin ()

EERC Working Paper Series from EERC Research Network, Russia and CIS

Abstract: A bank can be viewed as a firm that uses deposits as inputs to “produce” loans and investments. If a manager does all her best, the bank affords its production possibilities frontier. However, the manager’s incentives may not go in-line with those of the bank’s owners, and this leads to X-inefficiency. The purpose of the research is two-fold. First, we measure the X-inefficiency of Russian banks econometrically using a quarterly panel of financial statements of all Russian banks for the period 1998-2002. Second, we explain the variation in X-inefficiency among Russian banks with a number of determinants such as the diversification of ownership structure, the type of ownership, and the bank size. Our findings suggest inter alia that regulatory authorities should be cautios in interpreting raw X-inefficiency scores: a low level of X-inefficiency may be due to the lack of intermediation rather that due an efficient intermediation.

Keywords: Russia; Russian banks (search for similar items in EconPapers)
Date: 2005-04-21
New Economics Papers: this item is included in nep-eff and nep-tra
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Citations: View citations in EconPapers (15) Track citations by RSS feed

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