Identification of Segments of European Banks with a Latent Class Frontier Model

26 Pages Posted: 10 Oct 2007

See all articles by Carlos Pestana Barros

Carlos Pestana Barros

Technical University of Lisbon - Instituto Superior de Economia e Gestao

Guglielmo Maria Caporale

Brunel University London - Department of Economics and Finance; London South Bank University; CESifo (Center for Economic Studies and Ifo Institute); German Institute for Economic Research (DIW Berlin)

Luis A. Gil-Alana

University of Navarra - Department of Economics

Date Written: October 2007

Abstract

This paper analyses technical efficiency of European banks over the period 1996-2003 with unbalanced panel data techniques. A latent class frontier model is used which allows the identification of different segments in the production frontier. We find that there are three statistically significant segments in the sample. Therefore, we conclude that no common banking policy can be effective for all the banks included in the sample, and that banking policies by segments are required instead.

Keywords: European banking, latent class frontier model, technical efficiency

JEL Classification: C23, G21

Suggested Citation

Barros, Carlos Pestana and Caporale, Guglielmo Maria and Gil-Alana, Luis A., Identification of Segments of European Banks with a Latent Class Frontier Model (October 2007). CESifo Working Paper Series No. 2110, Available at SSRN: https://ssrn.com/abstract=1020553

Carlos Pestana Barros

Technical University of Lisbon - Instituto Superior de Economia e Gestao ( email )

R. Miguel Lupi, 20
Lisbon, 1200
Portugal

Guglielmo Maria Caporale (Contact Author)

Brunel University London - Department of Economics and Finance ( email )

Kingston Lane
Marie Jahoda Building
Uxbridge, Middlesex UB8 3PH
United Kingdom
+44 1895 266713 (Phone)
+44 1895 269770 (Fax)

HOME PAGE: http://www.brunel.ac.uk/about/acad/bbs/bbsstaff/ef_staff/guglielmocaporale/

London South Bank University ( email )

Centre for Monetary and Financial Economics
London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Luis A. Gil-Alana

University of Navarra - Department of Economics ( email )

Campus de Arrosadia
Pamplona, 31006
Spain

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