Failure of commercial banks. A study of efficiency and productivity

Authors

  • Isabel González Bravo
  • René Mariaca Daza

DOI:

https://doi.org/10.35319/lajed.201013158

Keywords:

Honduras, Malmquist Index, Bank

Abstract

The study of the relationship between the productivity behavior of banks and their capacity to maintain themselves in the market, is the objective of the present investigation. Therefore Malmquist indices, which derive from the non-parametric econometric technique of Data Envelopment Analysis (DEA), will be used. The results of the mentioned operation conclude that it is not possible to establish a direct relationship between efficiency, productivity and company closing. The document is based on the Honduran banking system from 1999 to 2002 period.

Downloads

Download data is not yet available.

References

Angelidis, D. y K. Lyroudi. 2006. “Efficiency in the Italian Banking Industry: Data Envelopment and Neural Networks”. International Research Journal of Finance and Economics, Issue 5, pp 155 – 165.

Asmild, M., J. Paradi, V. Aggarwall y C. Schaffnit. 2004. “Combining DEA Window Analysis with the Malmquist Index Approach in a Study of the Canadian Banking Industry”. Journal of Productivity Analysis, Tomo 21 No 1, pp 67-89.

Barr, P., L. Seiford y T. Siems. 1994. “Forecasting Bank Failure: A Non-Parametric Approach”. Recherches Economiques de Louvain, 60 pp. 411-429.

Berg S. A., F. Forsund y E. Jansen. 1992. “Malmquist Indices of Productivity during the Deregulation of Norwegian Banking 1980-1989”. Scandinavian Journal Economics No 94 pp.211- 228.

Berger A. y D. Humphrey. 1991. “The Dominance of Inefficiencies over Scale and Product Mix Economies in Banking”. Journal of Monetary Economics 28, pp 117 – 148.

Berger, A. y D. Humphrey. 1992. “Measurement and efficiency Issues in Commercial Banking”. National Bureau of Economic Research. University of Chicago Press, USA, pp. 245-279.

Berger A. y D. Humphrey. 1997. “Efficiency of Financial Institutions: International Survey and Directions for future Research”. European Journal of Operations Research. No 98 pp 175 –212.

Casu, B. y P. Molyneux. 2003. “A Comparative Study of Efficiency in European Banking”. Applied Economics, 35, pp 1865-1876.

Chandrasekhar, M. y R. Sonar. 2008. “Impact of Information Technology on the Efficiency and Total Factor Productivity of Indian Banks”. South Asian Journal of Management, Vol. 15, No 3, pp.74 – 99.

Cebenoyan A., C. Cooperman y C. Register. 1993. “Firm Inefficiency and the Regulatory Clousure of S&Ls: An Empirical Investigation”. Review of Economics and Statistics, 75, pp540-5.

Charnes A., W. Cooper y E. Rodes. 1978. “Measuring of the Efficiency of Decision Making Units”. Eur. Journal of Operational Research 2 (6) pp. 429–444.

Conceicao M. y S. Portela. 2006. “Malmquist indexes using a geometric distance function (GDF). Aplication to a sample of Portuguese bank branches”. Journal of Productivity Analysis. Apr. 2006 T. 25 No 1 Pag 25 -41.

Drake L., M. Hall y R. Simper. 2003. “Efficiency in Japanese Banking: an empirical analysis”. Journal of Banking & Finance. Tomo 27, No 5 pp. 891.

Drake, L., M. Hall y R. Simper. 2009. “Bank Modelling methodologies: A comparative non-parametric analysis of efficiency in the Japanese banking sector”. Journal of International Financial Markets, Institutions & Money, Vol. 19 – I pp 1-15.

Galagedera, T. y P. Edirisuriya. 2005. “Performance of Indian Commercial Banks”. South Asian Journal of Management, Oc-Dec 12,4 pp 52.

Grifell-Tatjé, L. 1995. “A note on the Malmquist Productivity Index”. Economics Letters 47 pp 169-175.

Grifell-Tatjé, L. y C.A.K. Lovell. 1996. “Deregulation and Productivity Decline: The Case of Spanish Savings Banks”. European Economic Review, No 40 pp. 1281-1303.

Grigorian, D. y V. Manole. 2002. “Determinants of Commercial Bank Performance in Transition: An Application of DEA”. IMF working paper 02/146

Guzman, I. y C. Reverte. 2008. “Productivity and Efficiency Change and Shareholders Value: Evidence from the Spanish Banking Sector”. Applied Economics, 40: 15 pp. 2033-2040.

Hancock, D. 1991. A theory of Production for the Financial Firms. Norwell. MA: Kluwer Academic Publishers.

Hermalin, B. y N. Wallace. 1994. “The Determinants of Efficiency and Solvency in Savings and Loans”. Journal of Economics 25 pp. 361-381.

Hughes, J.P. y L.J. Mester. 1993. “A Quality and Risk-Adjusted Cost Function for Banks: Evidence on the Too-Big-to-Fail doctrine”. Journal of Productivity Analysis No 4 pp. 293-315.

Krishnasamy, G. y J. Perumal. 2003. “Malaysian Post Merger Banks Productivity: Application of Malmquist Productivity Indices”. Managerial Finance, Volumen 30 No 4 pp. 63-73.

Mester, L.J. 1996. “A Study of Bank Efficiency Taking into Account Risk-Preferences”. Journal of Banking and Finance, pp 1025-1045.

Mester, L.J. 1997. “Measuring Efficiency at U.S. Banks: Accounting for Heterogeneity is Important”. European Journal of Operational Research.

Pasiouras, F. 2008. “Estimating the technical and scale efficiency of Greek commercial banks: The impact of credit risk, off-balance sheet activities, and international operations”. Research in International Business and Finance, No 22 pp 301-318.

Pastor, J., F. Perez y J. Quesada, 1997. “Efficiency Analysis in Banking Firms: An International Comparison”. European Journal of Operational Research, Vol 98 No 2.

Pastor, J.M. 1998. “Gestión del riesgo y eficiencia en los bancos y cajas de ahorros”. No 142/1998 Serie Documentos de Trabajo, Fundación de Cajas de Ahorro Confederadas para la Investigación Económica y Social – España.

Ray, S. y A. Dabs. 2009. “Distribution of cost and profit efficiency: Evidence from Indian Banking”. European Journal of Operational Research, Vol. 30No 2, pp 3-11.

Rezitis, A. 2006. “Productivity Growth in the Greek Banking Industry: a non-parametric approach”. Journal of Applied Economics, Vol. IX No 1 pp 119-138.

Sathye, M. 2002. “Measuring Productivity Changes in Australian Banking: An Application of Malmquist Indices”. Managerial Finance, vol 29 No 9 pp 48-59.

Serrano-Cinca, C., C. Marmoliero y F. Chaparro. 2004. “Spanish Saving Banks: a view on Intangibles”. Knowledge Management Research & Practice, Volumen 2 No 2 pp. 103-117.

Thanassoulis, E. 1999. “Data Envelopment Analysis and Its Use in Banking”. Interfaces, Mayo/Junio 1999 Vol. 29, edición 3 pp. 1-13.

Tortosa-Ausina, E., E. Grifell-Tatjé, C. Armero y D. Conesa. 2008. “Sensitivity analysis of Efficiency and Malmquist Productivity Indices: An application to Spanish Savings Banks”. European Journal of Operational Research, No 184 pp. 1062-1084.

Wheelock, D. y P. Wilson. 1999. “Technical progress, inefficiency, and productivity change in U.S. banking”. Journal of Money, Credit and Banking, Mayo 1999 31,2 pp. 212.

Worthington, A. C. 2000. “Technical Efficiency and Technological Change in Australian Buildings Societies”. Abacus, Vol. 36, No 2 pp. 180-197.

Published

2010-06-01

How to Cite

González Bravo, I., & Mariaca Daza, R. (2010). Failure of commercial banks. A study of efficiency and productivity. Latin American Journal of Economic Development, 8(13), 137–164. https://doi.org/10.35319/lajed.201013158