The Effects of Risks and Environmental Factors on Cost Efficiency: The Case of Developed and Developing Banking Systems in East Asia and Pacific Region

Posted: 16 Aug 2014

See all articles by Thu Thi Minh Phan

Thu Thi Minh Phan

University of Western Sydney - School of Business; Western Sydney University

Kevin Daly

University of Western Sydney - School of Business

Date Written: August 1, 2014

Abstract

The interrelationship between risks and bank efficiency has received much attention in banking literature for years, especially after the Asian financial crisis in 1997 and the Global financial crisis in 2008. This study collected and analyzed the data of 247 banks of twelve developed and developing economies in East Asia and Pacific area over the 2003-2012 period to find the empirical evidence for that relationships. The analyzing process went through two main stages: Measuring banks cost efficiency by applying Stochastic Frontier Analysis and examining the effects of risks on cost efficiency. We found that there are significant relationships among risks, cost efficiency, and environmental factors, but they are in different levels when comparing between developed and developing economies, or between the periods of pre- and post 2008 financial crisis.

Keywords: bank cost efficiency, bank risk, SFA, banking, East Asia and Pacific

Suggested Citation

Phan, Thu Thi Minh and Daly, Kevin, The Effects of Risks and Environmental Factors on Cost Efficiency: The Case of Developed and Developing Banking Systems in East Asia and Pacific Region (August 1, 2014). 27th Australasian Finance and Banking Conference 2014 Paper. Available at SSRN: https://ssrn.com/abstract=2480756 or http://dx.doi.org/10.2139/ssrn.2480756

Thu Thi Minh Phan (Contact Author)

University of Western Sydney - School of Business ( email )

Sydney, NSW 1797
Australia

Western Sydney University ( email )

PO Box 10
Kingswood, NSW 2747
Australia

Kevin Daly

University of Western Sydney - School of Business ( email )

Sydney, NSW 1797
Australia

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