Loughborough University
Leicestershire, UK
LE11 3TU
+44 (0)1509 263171
Loughborough University

Loughborough University Institutional Repository

Please use this identifier to cite or link to this item: https://dspace.lboro.ac.uk/2134/6003

Title: Accounting for environmental factors, bias and negative numbers in efficiency estimation: a bootstrapping application to the Hong Kong banking sector
Authors: Hall, Maximilian J.B.
Kenjegalieva, Karligash
Simper, Richard
Keywords: Hong Kong banks
DEA
Slacks
Environmental factors
Negative numbers
Bias
Issue Date: 2010
Publisher: © Loughborough University
Series/Report no.: Loughborough University. Department of Economics. Discussion Paper Series;WP 2010 - 03
Abstract: This paper examines the evolution of Hong Kong’s banking industry’s technical efficiency, and its macroeconomic determinants, during the period 2000-2006 through the prism of two alternative approaches to efficiency estimation, namely the intermediation and production approaches. Using a modified (Sharp, Meng and Liu, 2006) slacks-based model (Tone, 2001), and purging the efficiency estimates for random errors (Simar and Zelenyuk, 2007) , we firstly analyse the trends in bank efficiency. We then identify the ‘environmental’ factors that significantly affect the efficiency scores using an adaptation (Kenjegalieva et al. 2009) of the truncated regression approach suggested by Simar and Wilson. 2007). The first part of the analysis reveals that the Hong Kong banking industry suffered a severe downturn in estimated technical efficiency during 2001. It subsequently recovered, posting average efficiency scores of 92 per cent and 85 percent under the intermediation and production approaches respectively by the end of 2006. As for the sub-group analysis, commercial banks are, on average, shown to be the most efficient operators, while the investment bank group are shown to be the least efficient. Finally, with respect to the truncated regression analysis, the results suggest that smaller banks are more efficient than their larger counterparts, although larger banks are still able to enjoy gains from scale economies and benefit from the export of financial services. Moreover, private housing rent and the net export of goods and services are found to be negatively correlated with bank efficiency, while private consumption is shown to be positively correlated.
Description: This is a working paper. It is also available at: http://ideas.repec.org/p/lbo/lbowps/2010_03.html
Version: Published
URI: https://dspace.lboro.ac.uk/2134/6003
ISSN: 1750-4171
Appears in Collections:Working Papers (Economics)

Files associated with this item:

File Description SizeFormat
HK_2010.pdf271.34 kBAdobe PDFView/Open

 

SFX Query

Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.