Efficiency of Foreign Banks in Small Financial Sectors: Empirical Evidence from Fiji

13 Pages Posted: 22 Jan 2013

See all articles by Parmendra Sharma

Parmendra Sharma

Griffith University

Neelesh Gounder

University of the South Pacific - Department of Economics; Griffith University - Department of Accounting, Finance and Economics

Dong Xiang

Qilu University of Technology

Date Written: 2012

Abstract

Motivated by the Sharma and Gounder (2012b) finding that deposits may play a key role in enhancing bank credit to private sector in the Pacific, this study investigates a pertinent gap in the literature — the efficiency of banks in the region in converting deposits into credit. Data limitations restrict our investigation to Fiji only but provide additional insights on bank efficiency studies — that of banks in a foreign–controlled, small financial sector. DEA technique is used to measure the efficiency of all five banks over the 2000-2010 period. On one hand banks remain highly profitable and well capitalised but on the other they may be relatively inefficient in converting mobilised deposits into private sector credit. Moreover, the overall efficiencies may have deteriorated over time. Policy implications emerge, including requiring banks to become more efficient producers of credit. In light of the structural and operational similarities of financial sectors across the Pacific, the results of this study and policy implications are likely to apply to the rest of the Pacific.

Suggested Citation

Sharma, Parmendra and Gounder, Neelesh and Xiang, Dong, Efficiency of Foreign Banks in Small Financial Sectors: Empirical Evidence from Fiji (2012). Available at SSRN: https://ssrn.com/abstract=2204295 or http://dx.doi.org/10.2139/ssrn.2204295

Parmendra Sharma (Contact Author)

Griffith University ( email )

Department of Accounting Finance and Economics
Griffith business School
Brisbane, Queensland QLD 4111
Australia

Neelesh Gounder

University of the South Pacific - Department of Economics ( email )

Private Bag, Laucala Campus
Suva
Fiji

Griffith University - Department of Accounting, Finance and Economics ( email )

Parklands Drive
Brisbane, Queensland QLD 4215
Australia

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

Dong Xiang

Qilu University of Technology ( email )

58 Jiefang E Rd
Jinan, Shandong 250353
China

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