Impact of Policy Changes on Efficiency and Returns-to-Scale of Japanese Financial Institutions

Research in International Business and Finance, Vol 32, 159-171, 2014

Posted: 7 Feb 2015

See all articles by A. S. M. Sohel Azad

A. S. M. Sohel Azad

Deakin University

Yasushi Suzuki

Ritsumeikan Asia Pacific University

Victor Fang

Deakin University

Amirul Ahsan

Deakin University- Department of Finance

Date Written: May 13, 2014

Abstract

This paper examines the impact of FSA's (Financial Services Agency) recent policy changes on the efficiency and returns-to-scale (RTS) of Japanese financial institutions including banks, securities companies and bank holding companies. Three kinds of efficiency are investigated namely, technical efficiency (TE), pure technical efficiency (PTE) and scale efficiency (SE) using the non-parametric methodology named data envelopment analysis (DEA). The DEA analysis shows a substantial improvement in the overall efficiency of Japanese banks, albeit a significant difference of efficiency scores between the major/city banks and the regional banks. Results are robust to alternative specifications of efficiency and scale changes.

Keywords: Policy changes; DEA Efficiency; Returns-to-scale; Malmquist index

JEL Classification: C14; G21

Suggested Citation

Azad, A. S. M. Sohel and Suzuki, Yasushi and Fang, Victor and Ahsan, Amirul, Impact of Policy Changes on Efficiency and Returns-to-Scale of Japanese Financial Institutions (May 13, 2014). Research in International Business and Finance, Vol 32, 159-171, 2014, Available at SSRN: https://ssrn.com/abstract=2561063

A. S. M. Sohel Azad (Contact Author)

Deakin University ( email )

221 Burwood Highway
Burwood
Melbourne, Victoria 3125
Australia

Yasushi Suzuki

Ritsumeikan Asia Pacific University ( email )

1-1 Jumonjibaru
Beppu City, Oita 874-8577
Japan

Victor Fang

Deakin University ( email )

School of Acc Economics Finance
Burwood Highway
Burwood, Victoria 3215
Australia
92446919 (Phone)

HOME PAGE: http://www.deakin.edu.au

Amirul Ahsan

Deakin University- Department of Finance ( email )

221 Burwood Highway
Burwood, Victoria 3125
Australia
+613 9244 6571 (Phone)

HOME PAGE: http://www.deakin.edu.au

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