Bank Cost Efficiency in Kazakhstan and Russia
New Economic School - Central Economics and Mathematics Institute
February 15, 2010
BOFIT Discussion Paper No. 1/2010
The Kazakhstan banking system is increasingly viewed as more advanced than the Russian system. Kazakhstan adopted the International Accounting System (IAS) in 2003 and the Basel II norms in 2005, while Russia has yet to fully adopt either IAS or Basel II. In this paper, bank data for 2002-2006 are used to estimate models of bank cost efficiency. In contrast to most previous papers, no significance difference is found for the average cost efficiency scores of banks for the two countries during 2002-2006. How banks are ranked for efficiency depends upon the chosen model (input and output sets). An interesting insight is the finding that most banks in both countries are below optimal size.
Number of Pages in PDF File: 29
Keywords: cost efficiency, banks, stochastic frontier approach
JEL Classification: D21, G21, F30working papers series
Date posted: February 27, 2010
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