Inside the black box: what explains differences in the efficiencies of financial institutions?

Allen Berger () and Loretta Mester

No 97-1, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Over the past several years, substantial research effort has gone into measuring the efficiency of financial institutions. Many studies have found that inefficiencies are quite large, on the order of 20 percent or more of total banking industry costs and about half of the industry's potential profits. There is no consensus on the sources of the differences in measured efficiency. This paper examines several possible sources, including differences in efficiency concepts, measurement method, and a number of bank, market, and regulatory characteristics. We review the existing literature and provide new evidency using data on U.S. banks over the period 1990-5.

Keywords: Banks and banking - Costs; Financial institutions (search for similar items in EconPapers)
Date: 1997
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Related works:
Journal Article: Inside the black box: What explains differences in the efficiencies of financial institutions? (1997)
Working Paper: Inside the black box: what explains differences in the efficiencies of financial institutions? (1997)
Working Paper: Inside the Black Box: What Explains Differences in the Efficiencies of Financial Institutions? (1997)
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