Work detail

The impact of the credit crunch on the cost and profit efficiency of the banks: an international comparison

Author: Mgr. Adrian Babín
Year: 2011 - summer
Leaders: PhDr. Katarína Marková
Work type: Masters
Language: English
Pages: 121
Awards and prizes: M.A. with distinction from the Dean of the Faculty of Social Sciences for an excellent state-final examination performance and for an extraordinarily good masters diploma thesis.
Abstract: This thesis documents, using an unbalanced panel of Top 1000 World banks with observations for 2005 – 2009, three main aspects related to cost and profit efficiency in banking. First, it established that there is no correlation between a bank's rank in the Top and its rank given by the efficiency scores. However, the size of the banks plays a positive role on the cost efficiency of the institution, big banks having higher cost efficiencies than small banks. Conversely, the profit efficiency is equal across different sizes. Second, it verified that for 2005 – 2009 there is no evidence that banks from the developed countries are more efficient than banks from emerging economies. This finding is further supported by the third aspect, which shows that banks originating in the developed economies, with large exposures to more sophisticated banking products, have been hit the hardest by the financial crisis. However the banks managed to shrink their cost inefficiency while losing efficiency on the revenue side. The post crisis, 2009, proved to be a year in which banks across countries and regions converged in terms of efficiency and plateaued at about 10% and 25% for cost and profit inefficiency respectively.
Downloadable: Diploma Thesis of Babín


McKinsey & Company