City Research Online

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.

Publication 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
Publisher Keywords:	Regulation and deregulation policies, Asian banking markets, banks’ efficiency, frontiers
Subjects:	H Social Sciences > HJ Public Finance J Political Science > JZ International relations
Departments:	Bayes Business School > Finance
SWORD Depositor:	Symplectic Administrator

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