Journal
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
Volume 207, Issue 3, Pages 1587-1598Publisher
ELSEVIER
DOI: 10.1016/j.ejor.2010.06.007
Keywords
Stochastic frontier; Bayesian methods; Banking system; Emerging markets
Funding
- CNPQ Foundation
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This paper analyzes the efficiency of the Brazilian banking sector over the post-privatization period of 2000-2007. We employ a Bayesian stochastic frontier approach, which provides exact efficiency estimates and confidence intervals and thus, allows an accurate comparison across institutions and bank groups. The results suggest that large bank; are the most cost and profit efficient, supporting the concentration process observed in recent years. Foreign banks have achieved a good performance through either the establishment of new affiliates and the acquisition of local banks. The remaining public banks have had improvements in cost efficiency, but are relatively profit inefficient. Finally, we observe a positive impact of capitalization on efficiency. (C) 2010 Elsevier B.V. All rights reserved.
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