An Application of the Meta-frontier Cost Function to the Study of Bank Efficiencies and Technology Gaps in 16 European Countries

Abstract

This paper investigates the performance of commercial banks across 16 European countries for the years 1994-2003, adopting the newly developed meta-frontier cost function model by Battese et al. (2004). The model enables the decomposition of the meta-cost efficiency into two components: the usual technical efficiency (CE) and the technology gap ratios (TGR). Most of the mean TGR for the sample countries are much less than those of the mean CE, implying that there are quite a few banks utilizing inferior technologies and operating off the meta-cost frontier. Evidence is found that, over time, the average technical efficiency of the financial sectors in Europe’s markets improves and the technology gap shrinks. Although technical inefficiencies and technology gaps remain persistent, the current trend toward further de-specialization may prompt a more efficient banking system.

本研究採用Battese，Rao，and O`Donnell (2004)提出的共同生產函數(meta-production function)，擴充至共同成本函數，針對歐洲十六國商業銀行業深入分析，研究期間為1994 年至2003年；本模型可將共同成本效率拆解為技術效率(CE)及技術缺口比率(TGR)。研究結果發現多數樣本國家的TGR平均值小於CE的平均值，顯示多數銀行未能使用較佳生產技術致無法在效率邊界上從事生產；整體歐洲銀行廠商的技術效率隨時間經過逐漸獲得改善，技術缺口比率也呈遞減趨勢。目前儘管技術無效率及技術缺口仍存在，樣本銀行若金融機構的朝業務多元化發展，將有助於大幅改善金融機構的經營績效。