Institutions and Bank Performance: A Stochastic Frontier Analysis

26 Pages Posted: 10 Jan 2014

See all articles by Robert Lensink

Robert Lensink

University of Groningen - Department of Economics, Econometrics and Finance; Wageningen UR - Development Economics Group

Aljar Meesters

University of Groningen - Faculty of Economics and Business

Date Written: February 2014

Abstract

This article investigates the impact of institutions on bank efficiency and technology, using a stochastic frontier analysis of a data set of 7,959 banks across 136 countries over 10 years. The results confirm the importance of well‐developed institutions for the efficient operation of commercial banks. Furthermore, the insights reveal the impact of institutional reforms in improving bank efficiency. The results are robust to adjustments in country‐specific effects, achieved by including country dummies, as well as across different risk profiles. Moreover, they provide empirical evidence in support of the public view of the banking sector.

JEL Classification: E44, G21, G38, K00

Suggested Citation

Lensink, Robert and Meesters, Aljar, Institutions and Bank Performance: A Stochastic Frontier Analysis (February 2014). Oxford Bulletin of Economics and Statistics, Vol. 76, Issue 1, pp. 67-92, 2014, Available at SSRN: https://ssrn.com/abstract=2377076 or http://dx.doi.org/10.1111/obes.12002

Robert Lensink (Contact Author)

University of Groningen - Department of Economics, Econometrics and Finance ( email )

P.O. Box 800
9700 AH Groningen
Netherlands

Wageningen UR - Development Economics Group ( email )

Hollandseweg 1
WAGENINGEN, 6706 KN
Netherlands

Aljar Meesters

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
443
PlumX Metrics