Cost efficiency in the Latin American and Caribbean banking systems [An article from: Journal of International Financial Markets, Institutions & Money]

This digital document is a journal article from Journal of International Financial Markets, Institutions & Money, published by Elsevier in 2005. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
A common cost frontier with country-specific environmental variables was estimated for a panel of 481 banks from 16 Latin American countries. A stochastic frontier model was used to estimate cost inefficiency and scale and scope economies. The results suggest that there is a wide range of inefficiency levels across countries. Very small and very large banks are significantly more inefficient than large banks. Underperforming banks tend to be smaller, to be undercapitalized, to present a poor profit performance, to be more dependent on non-interest income, to be more risky, to have a less stable deposit base and to intermediate less.