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Post-crisis regulatory reforms and bank performance: lessons from Asia

Casu, B., Deng, B. and Ferrari, A. (2017) Post-crisis regulatory reforms and bank performance: lessons from Asia. European Journal of Finance, 23 (15). pp. 1544-1571. ISSN 1466-4364

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To link to this item DOI: 10.1080/1351847X.2016.1177566

Abstract/Summary

Based on a large dataset from eight Asian economies, we test the impact of post-crisis regulatory reforms on the performance of depository institutions in countries at different levels of financial development. We allow for technological heterogeneity and estimate a set of country-level stochastic cost frontiers followed by a deterministic bootstrapped meta-frontier to evaluate cost efficiency and cost technology. Our results support the view that liberalization policies have a positive impact on bank performance, while the reverse is true for prudential regulation policies. The removal of activities restrictions, bank privatization and foreign bank entry have a positive and significant impact on technological progress and cost efficiency. In contrast, prudential policies, which aim to protect the banking sector from excessive risk-taking, tend to adversely affect banks cost efficiency but not cost technology.

Item Type:Article
Refereed:Yes
Divisions:Faculty of Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
ID Code:64710
Uncontrolled Keywords:Regulation and deregulation policies; Asian banking markets; banks efficiency; frontiers.
Publisher:Taylor and Francis

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