Changes in ownership structure and bank efficiency in Asian developing countries: The role of financial freedom

This paper investigates the effect of the changes in bank ownership on cost efficiency across twelve Asian developing economies. We also evaluate how financial freedom shapes the effect of the changes in bank ownership on cost efficiency. Using stochastic frontier approach to estimate bank efficienc...

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Bibliographic Details
Published inInternational review of economics & finance Vol. 43; pp. 19 - 34
Main Authors Lin, Kun-Li, Doan, Anh Tuan, Doong, Shuh-Chyi
Format Journal Article
LanguageEnglish
Published Greenwich Elsevier Inc 01.05.2016
Elsevier Science Ltd
Subjects
Bank efficiency
Banks
Business ownership
Developing countries
Efficiency
Financial freedom
LDCs
Ownership changes
Public enterprise
Stochastic models
Studies
Asia
Financial freedom
Bank efficiency
Ownership changes
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Summary:This paper investigates the effect of the changes in bank ownership on cost efficiency across twelve Asian developing economies. We also evaluate how financial freedom shapes the effect of the changes in bank ownership on cost efficiency. Using stochastic frontier approach to estimate bank efficiency scores during the period 2003–2012, we find that foreign presence improves bank efficiency, primarily in countries with high financial freedom. In addition, our results also show that increased government (domestic) ownership of bank appears to improve (impede) bank efficiency in countries with more financial freedom after financial crisis.
ISSN:1059-0560
1873-8036
DOI:10.1016/j.iref.2015.10.029