Determinants of efficiency in South East Asian banking

Edward Gardener, Philip Molyneux, Linh Nguyen

Research output: Contribution to journalArticlepeer-review

44 Citations (Scopus)

Abstract

This paper explores the efficiency of banks in five South East Asian countries (Indonesia, Malaysia, the Philippines, Thailand, and Vietnam) using the nonparametric data envelopment approach and Tobit regression. The results indicate that efficiency has significantly declined over the period 1998–2004 indicating that the post-1997 crisis restructuring had a negative influence on bank performance. In line with the established literature on emerging markets, foreign banks appear to be more efficient than the domestic counterparts. However, state-owned banks exhibited greater efficiency than their local private sector peers. Among country-level factors, national banking development shows a strong and positive link with bank efficiency. The results are robust to different assumptions of bank inputs, outputs, technological changes, and national banking convergence.
Original languageEnglish
Pages (from-to)2693-2719
JournalThe Service Industries Journal
Volume31
Issue number16
DOIs
Publication statusPublished - 2011

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