The Impact of Financial Liberalization on Bank Efficiency: Evidence from Latin America and Asia

Hermes, Niels; Nhung, Vu Thi Hong

doi:10.2139/ssrn.983865

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The Impact of Financial Liberalization on Bank Efficiency: Evidence from Latin America and Asia

36 Pages Posted: 2 May 2007

See all articles by Niels Hermes

Niels Hermes

University of Groningen - Faculty of Economics and Business

Vu Thi Hong Nhung

Can Tho University - School of Economics and Business Administration

Date Written: April 2007

Abstract

This paper investigates the impact of financial liberalization on bank efficiency, using data for a sample of over 4,000 banks from ten emerging economies for the period 1991-2000. We use the DEA approach to calculate bank efficiency at the individual bank level. Bank efficiency measures are then aggregated at the country level to investigate the relationship between financial liberalization and bank efficiency, using a panel least square fixed-effects model. Overall, we find strong support for the positive impact of financial liberalization programmes on bank efficiency.

Keywords: Financial liberalization, bank efficiency, DEA, Asia, Latin America

JEL Classification: G18, G21, O53, O54

Suggested Citation: Suggested Citation

Hermes, Niels and Nhung, Vu Thi Hong, The Impact of Financial Liberalization on Bank Efficiency: Evidence from Latin America and Asia (April 2007). Available at SSRN: https://ssrn.com/abstract=983865 or http://dx.doi.org/10.2139/ssrn.983865