Efficiency and Stock Performance in European Banking

18 Pages Posted: 15 Apr 2006

See all articles by Elena Beccalli

Elena Beccalli

Catholic University of the Sacred Heart of Milan - Institute of Economy and Finance

Barbara Casu

City University London - Sir John Cass Business School

Claudia Girardone

University of Essex - Essex Business School

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Abstract

Recent competitive pressures have progressively driven banks to strategically focus on generating returns to shareholders. Therefore, the investigation of the determinants of bank performance and their relationship with share prices has become increasingly important. This paper extends the literature on market-based accounting to examine the relationship between stock prices and efficiency. Specifically, it investigates if changes in stock performance can be explained by changes in operating efficiency, derived by parametric and non-parametric methods. Results seem to suggest that changes in efficiency are reflected in changes in stock prices and that stocks of cost efficient banks tend to outperform their inefficient counterparts.

Suggested Citation

Beccalli, Elena and Casu, Barbara and Girardone, Claudia, Efficiency and Stock Performance in European Banking. Journal of Business Finance & Accounting, Vol. 33, No. 1-2, pp. 245-262, January/March 2006. Available at SSRN: https://ssrn.com/abstract=886402 or http://dx.doi.org/10.1111/j.1468-5957.2006.01362.x

Elena Beccalli (Contact Author)

Catholic University of the Sacred Heart of Milan - Institute of Economy and Finance ( email )

Via Necchi 5
20123 Milano
Italy

Barbara Casu

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Claudia Girardone

University of Essex - Essex Business School ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom
+44 1206874156 (Phone)
+44 1206873429 (Fax)

HOME PAGE: http://www.essex.ac.uk/ebs/staff/profile.aspx?ID=1045

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