The efficiency and the conduct of European banks: Developments after 1992

Review of Financial Economics - Tập 13 - Trang 371-396 - 2004
Paul Schure1, Rien Wagenvoort2, Dermot O'Brien3
1Department of Economics, University of Victoria, P.O. Box 1700, STN CSC, Victoria, BC, Canada V8W 2Y2
2European Investment Bank, Luxembourg, Luxembourg
3European University Institute, Florence, Italy

Tóm tắt

AbstractWe assess the efficiency of the European banking sector in the 5‐year period following the implementation of the Second Banking Directive of the European Union (EU). We first determine the degree of cost efficiency of EU banks in 1993–1997. After that, we explore to what extent efficient European banks are managed differently than their inefficient peers. Our datasets comprise 5 years of observations on 1347 savings and 873 commercial banks. We use the new recursive thick frontier approach (RTFA) method to establish our results. We find that structural factors, such as technological progress or increased bank competition, have lowered the cost base of banks by about 5% annually during the sample period. Managerial inability to control costs (X‐inefficiency) is with 17–25% the main source of bank inefficiency in the EU. Managerial efficiency varies a great deal within Europe, and there seems to be no tendency towards convergence. We find that small savings banks can exploit economies of scale. The EU savings bank sector would cut costs by about 3% if small savings banks merged.

Tài liệu tham khảo

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Review of Financial Economics

Tập 13

371-396

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