Bank efficiency in transitional countries: Sensitivity to stochastic frontier design

Arbeitspapier

This article provides an empirical insight on the heterogeneity in the estimates of banking efficiency produced by the stochastic frontier approach. Using data from five countries of Central and Eastern Europe, we study the sensitivity of the efficiency score and the efficiency ranking to a change in the design of the frontier. We found that the average scores are significantly smaller when the transcendental logarithmic functional form is used in the profit efficiency measurement and when the scaling effect is neglected in the cost efficiency measurement. The implied bank ranking is robust to changes in the stochastic frontier definition for cost efficiency, but not for profit efficiency.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IES Working Paper ; No. 13/2010

Classification and Topics

• Classification: Wirtschaft ; Estimation: General ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Firm Performance: Size, Diversification, and Scope
• Subject: banking ; efficiency ; stochastic frontier approach ; transitional countries ; Bank ; Kosten ; Gewinn ; Technische Effizienz ; Kosten-Wirksamkeits-Analyse ; Osteuropa

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Iršová, Zuzana
• Event: Veröffentlichung
• (who): Charles University in Prague, Institute of Economic Studies (IES)
• (where): Prague
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/83446
• Last update: 10.03.2025, 11:45 AM CET