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Comparative Cost Study of Foreign and Thai Domestic Banks 1990-2002: Estimating Cost Functions of the Thai Banking Industry

Author

Listed:
  • Okuda, Hidenobu
  • 奥田, 英信
  • オクダ, ヒデノブ
  • Rungsomboon, Suvadee

Abstract

This paper investigates the changing cost performances of foreign and domestic banks in Thailand in relation to increased foreign bank penetration by estimating their cost functions using panel data from 27 banks during 1990-2002. Our empirical analysis suggests that production technologies of foreign bank branches are distinct from those of Thai domestic banks. After the Asian crisis, financial reforms increased operating costs of domestic banks and reduced costs of foreign bank branches. Foreign acquisition of domestic banks after the crisis modernized their business activities, reduced costs associated with fee-based businesses and improved their operational efficiency.

Suggested Citation

  • Okuda, Hidenobu & 奥田, 英信 & オクダ, ヒデノブ & Rungsomboon, Suvadee, 2005. "Comparative Cost Study of Foreign and Thai Domestic Banks 1990-2002: Estimating Cost Functions of the Thai Banking Industry," CEI Working Paper Series 2004-19, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hitcei:2004-19
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/13881/wp2004-19a.pdf
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    Citations

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    Cited by:

    1. Chantal Herberholz, 2008. "The Foreign Bank Effect On Value Creation In Commercial Banks Incorporated In Thailand," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 53(02), pages 215-244.

    More about this item

    Keywords

    Cost function; Foreign Entry; Crisis; Thailand;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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