Firm Growth and Efficiency in the Banking Industry: A new test of the efficient structure hypothesis

Tetsushi Homma, Yoshiro Tsutsui () and Hirofumi Uchida

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This paper proposes a new test of the efficient structure hypothesis by directly examining the relation between firm efficiency and firm growth. This is also a test of the so-called quiet-life hypothesis. Applying this test to large banks in Japan, we find that more efficient banks become larger, which is consistent with the efficient structure hypothesis. We also find that market concentration reduces banks' cost efficiency, which is consistent with the quiet-life hypothesis. These findings imply that there is an intriguing growth-efficiency dynamic throughout the life cycle of banks, although yet another finding suggests that the economic impact of the quiet-life hypothesis is less significant than that of the efficient structure hypothesis.

Pages: 49 pages
Date: 2012-09
New Economics Papers: this item is included in nep-ban, nep-eff and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://www.rieti.go.jp/jp/publications/dp/12e060.pdf (application/pdf)

Related works:
Journal Article: Firm growth and efficiency in the banking industry: A new test of the efficient structure hypothesis (2014)
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:eti:dpaper:12060

Access Statistics for this paper

More papers in Discussion papers from Research Institute of Economy, Trade and Industry (RIETI) Contact information at EDIRC.
Bibliographic data for series maintained by TANIMOTO, Toko ().