Testing for convergence in bank efficiency: a cross-country analysis

This paper empirically investigates a possible convergence among the operational efficiency of financial institutions across countries. We explore (i) the relative performance of banking industries in two samples (European and global) over time, and (ii) whether banking industries are likely to atta...

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Bibliographic Details
Published in:The Service industries journal 2011-07, Vol.31 (9), p.1533-1547
Main Authors: Kösedağ, Arman, Denizel, Meltem, Özdemir, Öznur
Format: Article
Language:English
Subjects:
bank efficiency
Banking industry
Convergence
data envelopment analysis
Efficiency
empirical research methods
Integration
International finance
international/global issues
non-parametric tests
Studies
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Summary:This paper empirically investigates a possible convergence among the operational efficiency of financial institutions across countries. We explore (i) the relative performance of banking industries in two samples (European and global) over time, and (ii) whether banking industries are likely to attain the same level of efficiency in the long run as implied by international financial integration. We find that convergence in bank efficiency is incomplete and limited to European banking industries. Differing level of bank efficiencies across the globe may offer opportunities for international investors who would like to capitalize on such market imperfections. Our findings also have implications for policy makers who are concerned with the full integration and the stability of the global financial system.
ISSN:0264-2069
1743-9507
DOI:10.1080/02642060903580565