Rational cost inefficiency in Chinese banks

Matthews, Kent ORCID: https://orcid.org/0000-0001-6968-3098, Xiao, Zhiguo and Xu, Zhang 2009. Rational cost inefficiency in Chinese banks. [Working Paper]. Cardiff Economics Working Papers, Cardiff: Cardiff University.

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Abstract

According to a frequently cited finding by Berger et al (1993), X-inefficiency contributes 20% to cost-inefficiency in western banks. Empirical studies of Chinese banks tend to place cost-inefficiency in the region of 50%. Such estimates would suggest that Chinese banks suffer from gross cost inefficiency. Using a nonparametric bootstrapping method, this study decomposes cost-inefficiency in Chinese banks into X-inefficiency and allocative-inefficiency. It argues that allocative inefficiency is the optimal outcome of input resource allocation subject to enforced employment constraints. The resulting analysis suggests that allowing for rational allocative inefficiency; Chinese banks are no better or worse than their western counterparts.

Item Type:	Monograph (Working Paper)
Date Type:	Publication
Status:	Published
Schools:	Schools > Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory
Publisher:	Cardiff University
Date of First Compliant Deposit:	30 March 2016
Last Modified:	28 Oct 2022 10:19
URI:	https://orca.cardiff.ac.uk/id/eprint/77826

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