Explaining Efficiency Differences Among Large German and Austrian Banks
24 Pages Posted: 15 Feb 2006
Date Written: August 2004
Cost-efficiency, scale efficiency, and productivity change are estimated by data envelopment analysis; and cost-efficiency is regressed on explanatory variables. No evidence is found for average productivity responding to deregulation over the period studied. State-owned banks are found to be more cost-efficient (likely owing to cheaper funds) and cooperative banks to be about as cost-efficient as private banks. Increasing economies of scale but decreasing economies of scope provide rationale for M&As among banks with similar product portfolios. Interbank and capital market funding is found to be more cost-efficient than deposits when the cost of retail networks is controlled for.
Keywords: Banks, efficiency, Germany, Austria, data envelopment analysis
JEL Classification: G21, G34
Suggested Citation: Suggested Citation