Cooperative Bank Efficiency in Japan: A Parametric Distance Function Analysis

47 Pages Posted: 17 Oct 2010 Last revised: 20 Feb 2014

See all articles by J. Colin Glass

J. Colin Glass

Ulster Business School

Donal G. McKillop

Queen's University Management School

Barry Quinn

Queen's University Management School

John O. S. Wilson

University of St. Andrews

Date Written: October 17, 2010

Abstract

This study examines the relative performance of Japanese cooperative banks between 1998 and 2009, explicitly modeling non-performing loans as an undesirable output. Three key findings emerge. First, the sector is characterized by increasing returns to scale which supports the ongoing amalgamation process within the sector. Second, although restricted in product offerings, markets and their membership base, Japanese cooperatives secured both technical progress (a positive shift in the frontier) and a decrease in technical inefficiency (distance from the frontier). Third, the analysis highlighted that regulatory pressure to reduce non-performing loans will have an adverse impact on both output and performance.

Keywords: Japanese Cooperative Banks, Efficiency, Regulatory compliance

JEL Classification: G21

Suggested Citation

Glass, J. Colin and McKillop, Donal G. and Quinn, Barry and Wilson, John O. S., Cooperative Bank Efficiency in Japan: A Parametric Distance Function Analysis (October 17, 2010). Available at SSRN: https://ssrn.com/abstract=1693523 or http://dx.doi.org/10.2139/ssrn.1693523

J. Colin Glass

Ulster Business School ( email )

Co. Londonderry BT37 0QB
Northern Ireland

Donal G. McKillop

Queen's University Management School ( email )

25 University Square
Belfast, Northern Ireland BT7 1NN
Northern Ireland

Barry Quinn

Queen's University Management School ( email )

Riddel Hall
185 Stranmillis Road
Belfast, BT9 5EE
United Kingdom

HOME PAGE: http://www.barryquinn.com

John O. S. Wilson (Contact Author)

University of St. Andrews ( email )

North St
Saint Andrews, Fife KY16 9AJ
United Kingdom

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