IMPACTS OF THE ECONOMIC COOPERATION FRAMEWORK AGREEMENT ON BANKING COST EFFICIENCY IN CHINA AND TAIWAN — A STOCHASTIC METAFRONTIER APPROACH

This study extends the stochastic metafrontier model (SMF) of Huang, Huang and Liu (2014) to compare the meta-cost banking efficiency in China and Taiwan from 2007 to 2013, and to analyze the impacts on cost efficiency following the implementation of the Economic Cooperation Framework Agreement (ECF...

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Bibliographic Details
Published in:Hitotsubashi journal of economics 2017-12, Vol.58 (2), p.121-141
Main Authors: Yang, Yung-Lieh, Cho, Tsui-Yueh, Huang, Ming-Hsiang
Format: Article
Language:English
Subjects:
Bank loans
Bank markets
Banking
Banking industry
Banking regulation
Banks
Commercial banks
Cooperation
Cost efficiency
Cost estimates
Economic costs
Efficiency
Impact analysis
International cooperation
International economic cooperation
Stochastic models
Studies
Technology
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Summary:This study extends the stochastic metafrontier model (SMF) of Huang, Huang and Liu (2014) to compare the meta-cost banking efficiency in China and Taiwan from 2007 to 2013, and to analyze the impacts on cost efficiency following the implementation of the Economic Cooperation Framework Agreement (ECFA). The empirical tests show that the banking sectors in both China and Taiwan implemented distinct technology-related policies during this period. Following the implementation of ECFA, the meta-cost efficiency for Taiwan's banking sectors showed a distinct improvement. Besides, the Chinese banks which had established branches in Taiwan experienced a significant enhancement in meta-cost efficiency. Several managerial insights and implications are discussed.
ISSN:0018-280X
2436-097X
DOI:10.15057/28951