The determinants of Bank Cost Inefficiency in ASEAN Banking

The determinants of Bank Cost Inefficiency in ASEAN Banking

This study examines the determinants of cost inefficiency of banks operating in 6 member countries of the Association of Southeast Asian Nations (ASEAN): Indonesia, Malaysia, Singapore, Thailand, the Philippines, and Vietnam. First, we estimate the cost inefficiency using the Stochastic Frontier An...

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Main Authors: Izah Mohd Tahir, Abdul Mongid, Sudin Haron
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2012
Online Access:http://journalarticle.ukm.my/6380/
http://journalarticle.ukm.my/6380/
http://journalarticle.ukm.my/6380/1/Fast_color_scan_to_a_PDF_file_6.DOC
id ukm-6380
recordtype eprints
spelling ukm-63802013-07-01T03:08:02Z http://journalarticle.ukm.my/6380/ The determinants of Bank Cost Inefficiency in ASEAN Banking Izah Mohd Tahir, Abdul Mongid, Sudin Haron, This study examines the determinants of cost inefficiency of banks operating in 6 member countries of the Association of Southeast Asian Nations (ASEAN): Indonesia, Malaysia, Singapore, Thailand, the Philippines, and Vietnam. First, we estimate the cost inefficiency using the Stochastic Frontier Analysis. Second, we regress the estimated cost inefficiencies on a set of bank specific variables (size, equity to total asset, loan to total asset, personnel expenses to total expenses) and environmental variables (corruption, economic growth and economic freedom) using a Tobit regression analysis. We use a panel dataset of 625 banks in the ASEAN countries for the period from 2003 to 2008. Our results show that the average cost inefficiency during the period is about 33% of the observed total costs. Banks in Singapore exhibit the lowest cost inefficiency relative to banks in the other ASEAN countries. Our second stage results suggest that bank specific variables and economic growth are important determinants of bank cost inefficiencies in ASEAN banking. The impact of corruption and economic freedom is also evident, but only to a limited extent. Penerbit Universiti Kebangsaan Malaysia 2012-12 Article PeerReviewed application/msword en http://journalarticle.ukm.my/6380/1/Fast_color_scan_to_a_PDF_file_6.DOC Izah Mohd Tahir, and Abdul Mongid, and Sudin Haron, (2012) The determinants of Bank Cost Inefficiency in ASEAN Banking. Jurnal Pengurusan (36). pp. 69-76. ISSN 0127-2713 http://pkukmweb.ukm.my/penerbit/jurus.htm
repository_type Digital Repository
institution_category Local University
institution Universiti Kebangasaan Malaysia
building UKM Institutional Repository
collection Online Access
language English
description This study examines the determinants of cost inefficiency of banks operating in 6 member countries of the Association of Southeast Asian Nations (ASEAN): Indonesia, Malaysia, Singapore, Thailand, the Philippines, and Vietnam. First, we estimate the cost inefficiency using the Stochastic Frontier Analysis. Second, we regress the estimated cost inefficiencies on a set of bank specific variables (size, equity to total asset, loan to total asset, personnel expenses to total expenses) and environmental variables (corruption, economic growth and economic freedom) using a Tobit regression analysis. We use a panel dataset of 625 banks in the ASEAN countries for the period from 2003 to 2008. Our results show that the average cost inefficiency during the period is about 33% of the observed total costs. Banks in Singapore exhibit the lowest cost inefficiency relative to banks in the other ASEAN countries. Our second stage results suggest that bank specific variables and economic growth are important determinants of bank cost inefficiencies in ASEAN banking. The impact of corruption and economic freedom is also evident, but only to a limited extent.
format Article
author Izah Mohd Tahir,
Abdul Mongid,
Sudin Haron,
spellingShingle Izah Mohd Tahir,
Abdul Mongid,
Sudin Haron,
The determinants of Bank Cost Inefficiency in ASEAN Banking
author_facet Izah Mohd Tahir,
Abdul Mongid,
Sudin Haron,
author_sort Izah Mohd Tahir,
title The determinants of Bank Cost Inefficiency in ASEAN Banking
title_short The determinants of Bank Cost Inefficiency in ASEAN Banking
title_full The determinants of Bank Cost Inefficiency in ASEAN Banking
title_fullStr The determinants of Bank Cost Inefficiency in ASEAN Banking
title_full_unstemmed The determinants of Bank Cost Inefficiency in ASEAN Banking
title_sort determinants of bank cost inefficiency in asean banking
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2012
url http://journalarticle.ukm.my/6380/
http://journalarticle.ukm.my/6380/
http://journalarticle.ukm.my/6380/1/Fast_color_scan_to_a_PDF_file_6.DOC
first_indexed 2023-09-18T19:46:43Z
last_indexed 2023-09-18T19:46:43Z
_version_ 1777405948970663936

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