Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia

The present study investigates for the first time the efficiency of Malaysian banking sector around the Asian financial crisis 1997. The efficiency estimates of individual banks are evaluated by using the Data Envelopment Analysis (DEA) approach. To examine the robustness of the estimated efficiency...

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Main Author:	Sufian, Fadzlan
Format:	Article
Language:	English
Published:	Elsevier 2009
Subjects:	HG1501 Banking
Online Access:	http://irep.iium.edu.my/5253/ http://irep.iium.edu.my/5253/ http://irep.iium.edu.my/5253/ http://irep.iium.edu.my/5253/1/sdarticle_261108_%282%29_OWN.pdf

id	iium-5253
recordtype	eprints
spelling	iium-52532011-12-20T08:07:21Z http://irep.iium.edu.my/5253/ Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia Sufian, Fadzlan HG1501 Banking The present study investigates for the first time the efficiency of Malaysian banking sector around the Asian financial crisis 1997. The efficiency estimates of individual banks are evaluated by using the Data Envelopment Analysis (DEA) approach. To examine the robustness of the estimated efficiency scores under various alternatives and to differentiate how efficiency scores vary with changes in inputs and outputs, the present study focuses on three major approaches viz., intermediation approach, value added approach, and operating approach. The analysis further links the variation in calculated efficiencies to a set of explanatory variables, i.e. bank size, profitability, and ownership. The empirical findings clearly bring forth the high degree of inefficiency in the Malaysian banking sector, particularly a year after the East Asian crisis. The results suggest that the decline in technical efficiency is more abrupt under the intermediation approach relative to the value added approach and operating approach. The regression results focusing on bank efficiency and other bank specific traits suggest that efficiency is negatively related to expense preference behavior and economic conditions, while bank efficiency is positively related to loans intensity. Elsevier 2009-01 Article PeerReviewed application/pdf en http://irep.iium.edu.my/5253/1/sdarticle_261108_%282%29_OWN.pdf Sufian, Fadzlan (2009) Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia. Research in International Business and Finance, 23 (1). pp. 54-77. ISSN 0275-5319 http://www.sciencedirect.com/science/article/pii/S0275531908000391 doi:10.1016/j.ribaf.2008.07.002
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG1501 Banking
spellingShingle	HG1501 Banking Sufian, Fadzlan Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia
description	The present study investigates for the first time the efficiency of Malaysian banking sector around the Asian financial crisis 1997. The efficiency estimates of individual banks are evaluated by using the Data Envelopment Analysis (DEA) approach. To examine the robustness of the estimated efficiency scores under various alternatives and to differentiate how efficiency scores vary with changes in inputs and outputs, the present study focuses on three major approaches viz., intermediation approach, value added approach, and operating approach. The analysis further links the variation in calculated efficiencies to a set of explanatory variables, i.e. bank size, profitability, and ownership. The empirical findings clearly bring forth the high degree of inefficiency in the Malaysian banking sector, particularly a year after the East Asian crisis. The results suggest that the decline in technical efficiency is more abrupt under the intermediation approach relative to the value added approach and operating approach. The regression results focusing on bank efficiency and other bank specific traits suggest that efficiency is negatively related to expense preference behavior and economic conditions, while bank efficiency is positively related to loans intensity.
format	Article
author	Sufian, Fadzlan
author_facet	Sufian, Fadzlan
author_sort	Sufian, Fadzlan
title	Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia
title_short	Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia
title_full	Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia
title_fullStr	Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia
title_full_unstemmed	Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia
title_sort	determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from malaysia
publisher	Elsevier
publishDate	2009
url	http://irep.iium.edu.my/5253/ http://irep.iium.edu.my/5253/ http://irep.iium.edu.my/5253/ http://irep.iium.edu.my/5253/1/sdarticle_261108_%282%29_OWN.pdf
first_indexed	2023-09-18T20:13:45Z
last_indexed	2023-09-18T20:13:45Z
_version_	1777407650203435008

Determinants of bank efficiency during unstable macroeconomic environment: empirical evidence from Malaysia

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