Open AccessFINANCIAL CRISIS, IMF, AND BANK EFFICIENCY: EMPIRICAL EVIDENCE FROM THE ASEAN-4 BANKING SECTORS
Author(s) -
Fadzlan Sufian,
Muzafar Shah Habibullah
Publication year - 2010
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 4
ISSN - 2460-9196
DOI - 10.21098/bemp.v12i2.369
Subject(s) - intermediation , financial system , data envelopment analysis , financial crisis , revenue , business , economics , empirical evidence , financial intermediary , empirical research , finance , macroeconomics , mathematical optimization , philosophy , mathematics , epistemology
Despite its severity and deep influence on both the real and financial sectors, empirical evidence on the evolution of the performance of the ASEAN-4 banking sectors since the 1997-1998 Asian financial crisis is relatively scarce. By employing the Data Envelopment Analysis (DEA) approach the present study examines for the first time the impact of the Asian financial crisis on the efficiency of the ASEAN-4 countries banking sectors. This study focuses on two major approaches vis. intermediation and revenue approaches. The empirical findings suggest that the estimates of technical efficiency are consistently higher under the revenue approach. We find that banks are relatively inefficient in a more concentrated banking market. However, when we control for countries that participate in IMF program, the concentration ratio exhibits a positive relationship with bank efficiency levels, implying that the more concentrated banking system which participates in IMF program is relatively more efficient in their intermediation function during the post crisis period. Keywords: Efficiency, DEA, ASEAN, Regression.JEL Classification: G21; G28