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Factors Affecting Cost Efficiency of Commercial Banks in Kyrgyzstan

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  • Dastan Aseinov

    (Kyrgyz - Turkish Manas University)

Abstract

Efficiency of commercial banks is among important challenges not only for their shareholders and managers, but also for regulation and supervision authorities. The aim of this study is to examine factors affecting the banking cost efficiency for Kyrgyz banks. We estimate stochastic cost frontier model proposed by Battese and Coelli (1995) using unbalanced panel data set captured 23 Kyrgyz commercial banks for period of 2000-2013. Obtained results suggest that capitalization, foreign ownership, credit risk, liquidity risk and currency risk have most influence on banking cost efficiency. Cost efficiency scores can be used as an indicator for monitoring of risk-taking behavior of commercial banks by regulatory and supervisory authorities.

Suggested Citation

  • Dastan Aseinov, 2019. "Factors Affecting Cost Efficiency of Commercial Banks in Kyrgyzstan," Journal of Finance Letters (Maliye ve Finans Yazıları), Maliye ve Finans Yazıları Yayıncılık Ltd. Şti., vol. 34(112), pages 31-56, October.
    • Handle: RePEc:acc:malfin:v:34:y:2019:i:112:p:31-56
    DOI: https://doi.org/10.33203/mfy.479424
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    Keywords

    banking; stochastic frontier analysis; transition economies; cost efficiency;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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