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Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia

The present study investigates for the first time the efficiency of Malaysian banking sector around the Asian financial crisis 1997. The efficiency estimates of individual banks are evaluated by using the Data Envelopment Analysis (DEA) approach. To examine the robustness of the estimated efficiency...

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Main Author: Sufian, Fadzlan
Format: Article
Language:English
Published: Elsevier 2009
Online Access:http://psasir.upm.edu.my/id/eprint/40279/1/Determinants%20of%20bank%20efficiency%20during%20unstable%20macroeconomic%20environment%20empirical%20evidence%20from%20Malaysia.pdf
http://psasir.upm.edu.my/id/eprint/40279/
http://www.sciencedirect.com/science/article/pii/S0275531908000391
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spelling my.upm.eprints.402792015-09-15T07:10:06Z http://psasir.upm.edu.my/id/eprint/40279/ Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia Sufian, Fadzlan The present study investigates for the first time the efficiency of Malaysian banking sector around the Asian financial crisis 1997. The efficiency estimates of individual banks are evaluated by using the Data Envelopment Analysis (DEA) approach. To examine the robustness of the estimated efficiency scores under various alternatives and to differentiate how efficiency scores vary with changes in inputs and outputs, the present study focuses on three major approaches viz., intermediation approach, value added approach, and operating approach. The analysis further links the variation in calculated efficiencies to a set of explanatory variables, i.e. bank size, profitability, and ownership. The empirical findings clearly bring forth the high degree of inefficiency in the Malaysian banking sector, particularly a year after the East Asian crisis. The results suggest that the decline in technical efficiency is more abrupt under the intermediation approach relative to the value added approach and operating approach. The regression results focusing on bank efficiency and other bank specific traits suggest that efficiency is negatively related to expense preference behavior and economic conditions, while bank efficiency is positively related to loans intensity. Elsevier 2009-01 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/40279/1/Determinants%20of%20bank%20efficiency%20during%20unstable%20macroeconomic%20environment%20empirical%20evidence%20from%20Malaysia.pdf Sufian, Fadzlan (2009) Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia. Research in International Business and Finance, 23 (1). pp. 54-77. ISSN 0275-5319; ESSN: 1878-3384 http://www.sciencedirect.com/science/article/pii/S0275531908000391 10.1016/j.ribaf.2008.07.002
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description The present study investigates for the first time the efficiency of Malaysian banking sector around the Asian financial crisis 1997. The efficiency estimates of individual banks are evaluated by using the Data Envelopment Analysis (DEA) approach. To examine the robustness of the estimated efficiency scores under various alternatives and to differentiate how efficiency scores vary with changes in inputs and outputs, the present study focuses on three major approaches viz., intermediation approach, value added approach, and operating approach. The analysis further links the variation in calculated efficiencies to a set of explanatory variables, i.e. bank size, profitability, and ownership. The empirical findings clearly bring forth the high degree of inefficiency in the Malaysian banking sector, particularly a year after the East Asian crisis. The results suggest that the decline in technical efficiency is more abrupt under the intermediation approach relative to the value added approach and operating approach. The regression results focusing on bank efficiency and other bank specific traits suggest that efficiency is negatively related to expense preference behavior and economic conditions, while bank efficiency is positively related to loans intensity.
format Article
author Sufian, Fadzlan
spellingShingle Sufian, Fadzlan
Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia
author_facet Sufian, Fadzlan
author_sort Sufian, Fadzlan
title Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia
title_short Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia
title_full Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia
title_fullStr Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia
title_full_unstemmed Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia
title_sort determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from malaysia
publisher Elsevier
publishDate 2009
url http://psasir.upm.edu.my/id/eprint/40279/1/Determinants%20of%20bank%20efficiency%20during%20unstable%20macroeconomic%20environment%20empirical%20evidence%20from%20Malaysia.pdf
http://psasir.upm.edu.my/id/eprint/40279/
http://www.sciencedirect.com/science/article/pii/S0275531908000391
_version_ 1643832669697474560
score 13.211869

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