Publication detail

Bank Efficiency in Transitional Countries: Sensitivity to Stochastic Frontier Design

Author(s): doc. PhDr. Zuzana Havránková Ph.D.,
Type: IES Working Papers
Year: 2010
Number: 13
ISSN / ISBN:
Published in: IES Working Papers 13/2010 (also in William Davidson Institute WP 998/2010)
Publishing place: Prague
Keywords: Banking, Efficiency, Stochastic Frontier Approach, Transitional countries
JEL codes: C13; G21; L25
Suggested Citation: Iršová, Z. (2010). ”Bank Efficiency in Transitional Countries: Sensitivity to Stochastic Frontier Design” IES Working Paper 13/2010. IES FSV. Charles University.
Grants: GAUK 89910 Measuring Bank Efficiency
Abstract: This article provides an empirical insight on the heterogeneity in the estimates of banking efficiency produced by the stochastic frontier approach. Using data from five countries of Central and Eastern Europe, we study the sensitivity of the efficiency score and the efficiency ranking to a change in the design of the frontier. We found that the average scores are significantly smaller when the transcendental logarithmic functional form is used in the profit efficiency measurement and when the scaling effect is neglected in the cost efficiency measurement. The implied bank ranking is robust to changes in the stochastic frontier definition for cost efficiency, but not for profit efficiency.
Downloadable: WP 2010_13_Irsova

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