Post-crisis regulatory reforms and bank performance: lessons from Asia

Casu, B., Deng, B. & Ferrari, A. (2016). Post-crisis regulatory reforms and bank performance: lessons from Asia. European Journal of Finance, doi: 10.1080/1351847X.2016.1177566

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Abstract

Based on a large dataset from eight Asian economies, we test the impact of post-crisis regulatory reforms on the performance of depository institutions in countries at different levels of financial development. We allow for technological heterogeneity and estimate a set of country-level stochastic cost frontiers followed by a deterministic bootstrapped meta-frontier to evaluate cost efficiency and cost technology. Our results support the view that liberalization policies have a positive impact on bank performance, while the reverse is true for prudential regulation policies. The removal of activities restrictions, bank privatization and foreign bank entry has a positive and significant impact on technological progress and cost efficiency. In contrast, prudential policies, which aim to protect the banking sector from excessive risk-taking, tend to adversely affect banks’ cost efficiency but not cost technology.

Item Type: Article
Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis in European Journal of Finance on 28 April 2016, available online: http://dx.doi.org/10.1080/1351847X.2016.1177566
Uncontrolled Keywords: Regulation and deregulation policies, Asian banking markets, banks’ efficiency, frontiers
Subjects: H Social Sciences > HJ Public Finance
J Political Science > JZ International relations
Divisions: Cass Business School > Faculty of Finance
URI: http://openaccess.city.ac.uk/id/eprint/15686

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