Exploring the Nexus between Banking Sector Reform and Performance: Evidence from Newly Acceded EU Countries

By Sophocles N. Brissimis, Matthaios D. Delis, Nikolaos I. Papanikolaou. Social Science Research Network, 2008

346 citations recorded by the source corpus.

The aim of this study is to examine the relationship between banking sector reform and bank performance – measured in terms of efficiency, total factor productivity growth and net interest margin – accounting for the effects through competition and bank risk-taking. To this end, we develop an empirical model of bank performance and draw on recent econometric advances to consistently estimate it. The model is applied to bank panel data from ten newly acceded EU countries. The results indicate that both banking sector reform and competition exert a positive impact on bank efficiency, while the effect of reform on total factor productivity growth is significant only toward the end of the reform process. Finally, the effect of capital and credit risk on bank performance is in most cases negative, while it seems that higher liquid assets reduce the efficiency and productivity of banks.

Subfields: Accounting, Finance, Management Science and Operations Research

View Paper: https://www.semanticscholar.org/paper/53a8d5dd200cff35eab1d276883b5f3145f2aaf0

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Citations in the corpus

Institutional development and bank stability: Evidence from transition countries (2014, background): “6 Brissimis et al. (2008) investigate the effects of banking reforms in transition countries on bank efficiency.”
Regulations, competition and bank risk-taking in transition countries (2008, background): “Variables with bars represent deviations from their means, specified in this way to reduce multicollinearity (see Uchida and Tsutsui, 2005; Brissimis et al., 2008).”
Efficiency in the Vietnamese banking system: A DEA double bootstrap approach (2016, methodology): “Brissimis et al. (2008) employed Simar and Wilson’s (2007) bootstrap procedure to examine 364 banks from ten newly acceded EU countries between 1994 and 2005. Their results indicate that both banking sector reform and competition exert a positive impact on bank efficiency, while the effect of reform”
The joint estimation of bank-level market power and efficiency (2009, methodology): “10 Following standard practice in banking industry studies (see e.g. Brissimis et al., 2008), we define the price of inputs (w) as the ratio of capital and personnel expenses to total assets and the deposit rate (r d ) as the ratio of interest expenses to total deposits.”
Market power, revenue diversification and bank stability: Evidence from selected South Asian countries (2012, methodology): “To address the simultaneous relationship between bank market power and income from nontraditional activities, we employ GMM estimators developed for dynamic panel models by Arellano and Bover (1995) and Blundell and Bond (1998).”
Market concentration, risk-taking, and bank performance: evidence from emerging economies (2013, background): “In the income-based model, the estimated coefficient is negative and marginally significant at the 10% significance level, indicating that banks with low capital risk are more efficient in drawing income, consistent with literature (Mester, 1996; Brissimis et al., 2008; Altunbas et al., 2000).”
Bank Market Power, Economic Growth and Financial Stability: Evidence from Asian Banks (2011, methodology): “…of bank competition on financial stability, we construct the following equation that is consistent with the previous literature (Boyd et al, 2006; Brissimis et al, 2008; Agoraki et al, 2011; Soedarmono et al,…”
Competition in banking and the lending channel: Evidence from bank-level data in Asia and Latin America (2011, neutral): “6 For post-crisis reform measures towards enhancing competition in the banking sector, see Claessens and Laeven (2004) and Claessens (2009) for a global overview, Yildirim and Philippatos (2007) for Latin American countries, Bagliano et al.”
A Comparison of Performance of Islamic and Conventional Banks 2004 to 2009 (2014, neutral): “, 2002) Central & Eastern Europe (transition economies) Cross-country (Anayiotos et al., 2010; Bonin et al., 2005; Brissimis et al., 2008; Fries and Taci, 2005; Grigorian and Manole, 2006; Kasman and Yildrim, 2006; Koutsomanoli-Filippaki et al., 2009; Staikouras et al., 2008; Weill, 2002, 2003; Yild”
Financial openness, risk and bank efficiency: Cross-country evidence (2016, background): “Other related research on bank efficiency has considered the effects of banking and/or financial sector reforms as part of economic restructuring and liberalization in transition economies (e.g., Fries and Taci, 2005; Bonin et al., 2005; Brissimis et al., 2008) and, more recently, of the impact of g”