Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/109044
Authors: 
Luintel, Kul B.
Selim, Sheikh
Bajracharya, Pushkar
Year of Publication: 
2014
Series/Report no.: 
Cardiff Economics Working Papers E2014/14
Abstract: 
We model banks as profit-cum-utility maximizing firms and study, inter alia, bankers' incentives (optimal effort) and incentive driven productivity following deregulations. Our model puts to test a panel of Nepalese commercial banks which went through deep financial reforms in the recent past. We find that (i) bankers' efforts and productivity have notably improved in Nepal, (ii) bankers' efforts significantly explain the banking sector's productivity, (iii) the proportion of non-performing loans has considerably declined, and (iv) banking services have become costly, although the bank spread has moderately declined. Our approach is different from the widely used data envelopment analysis (DEA) of bank productivity, hence complements the literature. It also informs the current policy debate in Nepal where the Central Bank is seen to be geared towards regulating the financial system and micro-managing the banking institutions.
Subjects: 
Reforms
incentives
productivity
panel integration
cointegration
simulation
JEL: 
G21
G28
O43
O53
Document Type: 
Working Paper

Files in This Item:
File
Size
578.64 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.