Research Discussion Papers, Bank of Finland
No 24/2000:
Cross-Border Performance in European Banking
Iftekhar Hasan ()
, Ana Lozano-Vivas and Jesús T. Pastor
Abstract: Recent cross-country comparisons of bank efficiency have
been based on pooled estimates of banks across countries and have typically
assumed a common frontier and that differences in performance among banks
are primarily due to disparities in certain country-specific aspects of
banking technology. This paper argues that such comparisons of performance
must take into account cross-country differences in economic conditions,
demographics, and regulatory structures (environmental factors). Using a
sample of banks from ten leading European countries, this paper provides
detailed evaluations of the efficiency of banks in each country that
operate both within and outside their own environments. The results
indicate that adverse (advantageous) environmental conditions are a
positive (negative) factor for the home banking industry and that technical
efficiency is a significant deterrence to foreign competition.
Keywords: efficiency; technology; competition; regulation; (follow links to similar papers)
JEL-Codes: F23; G14; G21; G34; (follow links to similar papers)
26 pages, December 31, 2000
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