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
Date Written: May 13, 2014
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
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