Cooperative Bank Efficiency in Japan: A Parametric Distance Function Analysis
47 Pages Posted: 17 Oct 2010 Last revised: 20 Feb 2014
Date Written: October 17, 2010
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: Suggested Citation