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http://hdl.handle.net/10419/65742
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| Title: | | Rational cost inefficiency in Chinese banks  |
| Authors: | | Matthews, Kent Xiao, Zhiguo Zhang, Xu |
| Issue Date: | | 2009 |
| Series/Report no.: | | Cardiff Economics Working Papers E2009/13 |
| 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. |
| Subjects: | | Bank Efficiency China X-inefficiency DEA Bootstrapping |
| JEL: | | D23 G21 G28 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Cardiff Economics Working Papers
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