Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76381
Authors: 
Sturm, Jan-Egbert
Williams, Barry
Year of Publication: 
2002
Series/Report no.: 
CESifo Working Paper 816
Abstract: 
This study considers the efficiency of banking in Australia during the post-deregulation period 1988-2001. Since 1986 restrictions upon foreign bank entry and foreign ownership have been affectively abolished. Using Data Envelopment Analysis (DEA) and Malmquist Indices, we find that the new foreign banks are more (input) efficient than domestic banks, mainly due to their superior scale efficiency. However, this superior efficiency did not necessarily result in superior profits. Our results are consistent with the limited global advantage hypothesis of Berger et al (2000). We argue that the major Australian banks have used size as a barrier to entry to the new entrants in the post-deregulation period. Furthermore, bank efficiency seems to have increased post-deregulation and the competition resulting from diversity in bank types was important to prompt improvements in efficiency. Finally, the recession of the early 1990s resulted in a distinct shift in the process of efficiency changes.
Subjects: 
foreign banks
deregulation
data envelopment analysis
Malmquist indices
JEL: 
G21
G28
Document Type: 
Working Paper

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