Operating Performance of Banks among Asian Economies: An Internaitonal and Time Series Comparison

Simon Kwan

No 132002, Working Papers from Hong Kong Institute for Monetary Research

Abstract: Per unit bank operating costs are found to vary significantly across Asian countries and over time. The strong correlation between per unit labor cost and physical capital cost suggests that there exist systematic differences in bank operating efficiency across countries. The declining operating costs between 1992 and 1997 is consistent with improving operating performance. The run-up in operating costs since 1997 coincided with the Asian financial crisis, suggesting that banks incurred additional costs to deal with problem loans while outputs declined simultaneously. Labor cost share is also found to decline significantly between 1997 and 1999, perhaps because banks were able to cut labor force faster than physical capital. Significant differences in labor cost share across countries suggest crosscountry differences in bank production functions. The positive relation between labor cost share and wage rate indicates that banks use more labor due to higher labor force productivity, rather than labor being cheap.

Keywords: Asian Banking; Bank Production; Bank Efficiency; Operating Performance; Asian Financial Crisis (search for similar items in EconPapers)
JEL-codes: D24 G21 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2002-06
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Operating performance of banks among Asian economies: An international and time series comparison (2003)
Working Paper: Operating performance of banks among Asian economies: an international and time series comparison (2002)
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