Item

Bank efficiency in New Zealand: A stochastic frontier approach

Lu, YF
Gan, Christopher
Hu, Baiding
Toh, MY
Cohen, DA
Date
2018-03-31
Type
Journal Article
Fields of Research
Abstract
A parametric stochastic frontier analysis approach is employed to examine the cost and profit efficiency of banks in New Zealand over the study period of 2002–2011. Our result shows that foreign banks exhibit higher average cost and profit efficiency than domestic banks. We further document that Australian-owned banks operate more efficiently than foreign banks from other nations, supporting the limited global advantage hypothesis. Other distinguishing determinants of banks’ cost and profit efficiencies are bank size, equity ratio, asset quality, market concentration, interest rate, inflation and unemployment level. Lincoln University (LU).
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© 2018 New Zealand Association of Economists Incorporated
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