Bank efficiency in New Zealand: a stochastic frontier approach

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 Aus...

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Bibliographic Details
Published inNew Zealand economic papers Vol. 53; no. 2; pp. 166 - 183
Main Authors Lu, Ying Fang, Gan, Christopher, Hu, Baiding, Toh, Moau Yong, Cohen, David A
Format Journal Article
LanguageEnglish
Published Auckland Routledge 04.05.2019
Taylor & Francis Ltd
Subjects
Bank efficiency
Bank profits
Banks and banking
cost efficiency
Costs
Efficiency
profit efficiency
stochastic frontier analysis
New Zealand
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Summary: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).
Bibliography:Includes appendix, illustrations, notes, references, tables
ObjectType-Article-1
SourceType-Scholarly Journals-1
ObjectType-Feature-2
content type line 14
ISSN:0077-9954
1943-4863
DOI:10.1080/00779954.2018.1455728