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Determinants of efficiency in South East Asian banking

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  • Edward Gardener
  • Philip Molyneux
  • Hoai Nguyen-Linh

Abstract

This paper explores the efficiency of banks in five South East Asian countries (Indonesia, Malaysia, the Philippines, Thailand, and Vietnam) using the non-parametric 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.

Suggested Citation

  • Edward Gardener & Philip Molyneux & Hoai Nguyen-Linh, 2010. "Determinants of efficiency in South East Asian banking," The Service Industries Journal, Taylor & Francis Journals, vol. 31(16), pages 2693-2719, July.
    • Handle: RePEc:taf:servic:v:31:y:2010:i:16:p:2693-2719
    DOI: 10.1080/02642069.2010.512659
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