Cost Efficiency in South Asian Banking: The Impact of Bank Size, State Ownership and Stock Exchange Listings

ABSTRACT This study examines the cost efficiency performance of 111 commercial banks in Bangladesh, India, Pakistan and Sri Lanka over 1997–2004. The primary focus is to assess whether bank size, state ownership and stock exchange listing have significant effects on South Asian banks' efficienc...

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Bibliographic Details
Published in:International review of finance 2007-03, Vol.7 (1-2), p.35-60
Main Authors: PERERA, SHRIMAL, SKULLY, MICHAEL, WICKRAMANAYAKE, J.
Format: Article
Language:English
Subjects:
Banking industry
Banks
Commercial banks
Efficiency
Impact analysis
Stock exchanges
Studies
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Summary:ABSTRACT This study examines the cost efficiency performance of 111 commercial banks in Bangladesh, India, Pakistan and Sri Lanka over 1997–2004. The primary focus is to assess whether bank size, state ownership and stock exchange listing have significant effects on South Asian banks' efficiency performance. To this end, a translog‐form composite‐error cost efficiency model, which allows for exogenous environmental influences, is estimated. The results indicate that the overall efficiency of South Asian banks declined over 1997–2004. Larger banks and banks with widespread ownership through stock exchange listings were found to be relatively more cost efficient. In contrast, state‐owned banks were less efficient.
ISSN:1369-412X
1468-2443
DOI:10.1111/j.1468-2443.2007.00067.x