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Banking Operational Cost in the Balkan Region under a Quadratic Loss Function

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  • Mamatzakis, Emmanuel

Abstract

This paper presents of theoretical specification of a quadratic loss function based on forward looking rational expectations to model the underlying dynamics of operational performance of the banking industry. As an empirical application we examine the determinants of total operating costs within a dynamic panel analysis in the Balkan region that is the South East Europe (SEE) over the period 1998-2005. Results show that operating performance is positively related to loan quality and the asset size or the bank’s market share, whilst the speed of adjustment to the long run operational cost is substantial in magnitude.

Suggested Citation

  • Mamatzakis, Emmanuel, 2010. "Banking Operational Cost in the Balkan Region under a Quadratic Loss Function," MPRA Paper 24630, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:24630
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    References listed on IDEAS

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    More about this item

    Keywords

    Forward looking rational expectations; banking operating costs.;

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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