Efficiency and Productivity Growth: Modelling in the Financial Services Industry -- Copyright -- Contents -- Preface -- Contributors -- 1 Bank efficiency in Latin America -- 1.1 Introduction -- 1.2 Privatization and foreign banks in Latin America -- 1.3 Methodology -- 1.4 Model specification and data -- 1.5 Estimated parameters and cost efficiency -- 1.6 Conclusion -- References -- 2 A primer on market discipline and governance of financial institutions for those in a state of shocked disbelief -- 2.1 Introduction -- 2.2 Assessing the performance of financial institutions -- 2.3 Market discipline, public regulation, and the federal safety net -- 2.4 Sources of market discipline -- 2.4.1 Ownership structure -- 2.4.2 Capital markets -- 2.4.3 Product markets -- 2.4.4 Labor markets -- 2.4.5 Boards of directors -- 2.4.6 Compensation -- 2.5 Conclusions -- Appendix 2.A: Measuring performance based on the highest potential market value of assets -- References -- 3 Modeling economies of scale in banking: Simple versus complex models -- 3.1 Introduction -- 3.2 The increasing size of banks -- 3.3 What has allowed banks to grow larger? -- 3.3.1 New banking technologies -- 3.4 Why do banks choose to be large? -- 3.4.1 Objectives of bank management -- 3.4.2 Government subsidies -- 3.4.3 Scale economies -- 3.5 Econometric modeling of bank scale economies -- 3.5.1 Findings from 50 years of studies -- 3.6 Weaknesses in econometric modeling of bank scale economies -- 3.6.1 Few and far between -- 3.6.2 Strategic groups -- 3.6.3 External costs -- 3.7 Other evidence on bank scale economies -- 3.7.1 Survivor analysis -- 3.7.2 The market price of banks -- 3.7.3 Bank size and bank risk-return trade-offs -- 3.8 Conclusions -- References -- 4 Optimal size in banking: The role of off-balance sheet operations -- 4.1 Literature review.

4.2 Off-balance sheet activities of European banks -- 4.3 Methodology -- 4.3.1 Stochastic frontier analysis -- 4.3.2 Functional form -- 4.3.3 Scale economies -- 4.4 Data -- 4.5 Results -- 4.5.1 Increasing OBS operations -- 4.5.2 Nonseparability effects of OBS operations -- 4.6 Conclusion -- References -- 5 Productivity of foreign banks: Evidence from a financial center -- 5.1 Introduction -- 5.2 Literature overview -- 5.3 Methodology -- 5.3.1 TFP growth measures -- 5.3.2 Estimation of the TFP growth measures -- 5.4 Data and sources -- 5.5 Empirical results -- 5.5.1 Productivity growth over time -- 5.5.2 Breaking down productivity growth -- 5.6 Conclusions -- Acknowledgments -- References -- 6 The impact of merger and acquisition on efficiency and market power -- 6.1 Introduction -- 6.2 Literature review -- 6.3 Empirical design -- 6.3.1 Data -- 6.3.2 Variables -- 6.3.3 The econometric approach -- 6.4 Results -- 6.5 Conclusions -- References -- 7 Backtesting superfund portfolio strategies based on frontier-based mutual fund ratings -- 7.1 Introduction -- 7.2 Frontier-based mutual funds rating models -- 7.2.1 A taxonomy -- 7.2.2 MF frontier rating models retained -- 7.3 Backtesting setup, data description, and frontier-based portfolio models -- 7.3.1 Backtesting setup -- 7.3.2 Frontier-based portfolio models -- 7.3.3 Data description -- 7.4 Empirical analysis -- 7.4.1 Descriptive statistics -- 7.4.2 Analysis of both hedonic rating models -- 7.4.3 Backtesting results for 48 different strategies -- 7.4.4 Backtesting results for MF rating models: Some plausible explanations -- 7.5 Conclusions -- Acknowledgments -- References -- 8 Bank efficiency measurement and network DEA: A discussion of key issues and illustration of recent developments in the field -- 8.1 Introduction -- 8.2 Global financial crisis and the importance of DEA in bank performance analysis.

8.3 The wider contribution of DEA to bank efficiency analysis and potential improvements -- 8.4 Principal advantages and disadvantages of DEA -- 8.5 DEA versus stochastic frontier analysis -- 8.6 Drilling deeper with network DEA in search of inefficiencies -- 8.6.1 Definition of 'Network' in banking applications of NDEA -- 8.6.2 Conceptualizing bank branch production -- 8.6.3 Network slacks-based measure of efficiency -- 8.6.4 A brief numerical example -- 8.6.5 Jackknifing versus bootstrapping -- 8.7 Moving forward with DEA -- 8.8 Conclusions -- Appendix 8.A: Jackknifing -- References -- 9 A dynamic network DEA model with an application to Japanese Shinkin banks -- 9.1 Introduction -- 9.2 Literature review of productivity analysis in credit banks in Japan -- 9.3 Dynamic network production -- 9.3.1 The two-stage technology -- 9.3.2 Three-year dynamic DEA -- 9.4 Cooperative Shinkin banks: an empirical illustration -- 9.4.1 Defining bank inputs and outputs -- 9.4.2 NPLs in the efficiency/productivity measurement -- 9.4.3 Data -- 9.5 Estimates -- 9.6 Summary and conclusions -- References -- 10 Effects of specification choices on efficiency in DEA and SFA -- 10.1 Introduction -- 10.2 Bank benchmarking background -- 10.2.1 Theoretical foundations -- 10.2.2 Benchmarking techniques -- 10.2.3 Specification options -- 10.3 Methodologies -- 10.3.1 Stochastic frontier analysis -- 10.3.2 Data envelopment analysis -- 10.4 Data -- 10.5 Results -- 10.5.1 Efficiency distributions -- 10.5.2 Rank correlations -- 10.5.3 Extreme performers -- 10.5.4 Accounting-based indicators -- 10.6 Conclusion -- References -- 11 Efficiency and performance evaluation of European cooperative banks -- 11.1 Introduction -- 11.2 Methodology -- 11.2.1 Data envelopment analysis models -- 11.2.2 Multicriteria evaluation -- 11.3 Empirical results -- 11.3.1 Data and variables.

11.3.2 Efficiency analysis results -- 11.3.3 Multicriteria evaluation results -- 11.4 Conclusions -- References -- 12 A quantile regression approach to bank efficiency measurement -- 12.1 Introduction -- 12.2 Methodology and data -- 12.2.1 Methodology -- 12.2.2 Data and specification of the frontier -- 12.3 Empirical results -- 12.3.1 Cost efficiency estimates -- 12.3.2 Determinants of cost efficiency -- 12.4 Conclusions -- Appendix 12.A: Information on variables -- References -- Index.