Bank Efficiency Amid Foreign Entry: Evidence From the Central American Region

This paper investigates the efficiency of domestic and foreign banks in the Central American region during 2002-07. Using two main empirical approaches, Data Envelopment Analysis and Stochastic Frontier Analysis, the paper finds that foreign banks are not necessarily more efficient than their domest...

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Bibliographic Details
Main Author: Wezel, Torsten (Author)
Format: Electronic eBook
Language:English
Published: Washington, D.C International Monetary Fund 2010
Series:IMF Working Papers Working Paper No. 10/95
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Summary:This paper investigates the efficiency of domestic and foreign banks in the Central American region during 2002-07. Using two main empirical approaches, Data Envelopment Analysis and Stochastic Frontier Analysis, the paper finds that foreign banks are not necessarily more efficient than their domestic counterparts. If anything, the regional banks that were acquired by global banks in a wave of acquisitions during 2005-07 can keep up with the local institutions. The efficiency of these acquired banks, however, is shown to have dropped during the acquisition year, recovering only slightly thereafter. Finally, it is important to account for the environment in which banks operate, as country-, sector- and firm-specific characteristics are found to have a considerable influence on bank efficiency
Physical Description:1 Online-Ressource (33 p)
ISBN:1451982720
9781451982725

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