Impact of policy changes on the efficiency and returns-to-scale of Japanese financial institutions: An evaluation

This paper examines the impact of FSA's (Financial Services Agency) recent policy changes on the efficiency and returns-to-scale (RTS) of Japanese financial institutions including banks, securities companies and bank holding companies. Three kinds of efficiency are investigated namely, technica...

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Bibliographic Details
Published in:Research in international business and finance 2014-08, Vol.32, p.159-171
Main Authors: Azad, A.S.M. Sohel, Yasushi, Suzuki, Fang, Victor, Ahsan, Amirul
Format: Article
Language:English
Subjects:
DEA
Efficiency
Malmquist index
Policy changes
Returns-to-scale
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Summary:This paper examines the impact of FSA's (Financial Services Agency) recent policy changes on the efficiency and returns-to-scale (RTS) of Japanese financial institutions including banks, securities companies and bank holding companies. Three kinds of efficiency are investigated namely, technical efficiency (TE), pure technical efficiency (PTE) and scale efficiency (SE) using the non-parametric methodology named data envelopment analysis (DEA). The DEA analysis shows a substantial improvement in the overall efficiency of Japanese banks, albeit a significant difference of efficiency scores between the major/city banks and the regional banks. Results are robust to alternative specifications of efficiency and scale changes.
ISSN:0275-5319
1878-3384
DOI:10.1016/j.ribaf.2014.05.001