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Bank efficiency in New Zealand: a stochastic frontier approach

Author

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  • Ying Fang Lu
  • Christopher Gan
  • Baiding Hu
  • Moau Yong Toh
  • David A Cohen

Abstract

A parametric stochastic frontier analysis approach is employed to examine the cost and profit efficiency of banks in New Zealand over the study period of 2002–2011. Our result shows that foreign banks exhibit higher average cost and profit efficiency than domestic banks. We further document that Australian-owned banks operate more efficiently than foreign banks from other nations, supporting the limited global advantage hypothesis. Other distinguishing determinants of banks’ cost and profit efficiencies are bank size, equity ratio, asset quality, market concentration, interest rate, inflation and unemployment level. Lincoln University (LU).

Suggested Citation

  • Ying Fang Lu & Christopher Gan & Baiding Hu & Moau Yong Toh & David A Cohen, 2019. "Bank efficiency in New Zealand: a stochastic frontier approach," New Zealand Economic Papers, Taylor & Francis Journals, vol. 53(2), pages 166-183, May.
    • Handle: RePEc:taf:nzecpp:v:53:y:2019:i:2:p:166-183
    DOI: 10.1080/00779954.2018.1455728
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    Cited by:

    1. Facundo Costa de Arguibel & Carolina Wittig & Juan Antonio Dip, 2023. "Estructura de Propiedad, Origen de Capital y Eficiencia Bancaria: Evidencia para A," Working Papers 251, Red Nacional de Investigadores en Economía (RedNIE).
    2. Arandarage Mayura Prasad Arandara & Shingo Takahashi, 2023. "Productivity analysis of Sri Lankan cooperative banks: input distance function approach," Asia-Pacific Journal of Regional Science, Springer, vol. 7(1), pages 93-117, March.

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