Title: Financial crisis, IMF and bank efficiency: empirical evidence from the ASEAN-4 countries

Authors: Fadzlan Sufian

Addresses: Khazanah Research and Investment Strategy, Khazanah Nasional Berhad, Malaysia

Abstract: A variety of methodologies have been employed to examine the impact of the 1997 Asian financial crisis on the crisis-affected countries economies. However, the impact of crisis on the efficiency of the financial industry has yet to be studied. By employing the Data Envelopment Analysis (DEA) approach the present study examines for the first time the impact of the Asian financial crisis on the efficiency of the ASEAN-4 countries| banking sectors. This study focuses on two major approaches, viz. intermediation and revenue approaches. The empirical findings suggest that the estimates of technical efficiency are consistently higher under the revenue approach. We find that banks are relatively inefficient in a more concentrated banking market. However, when we control for countries that participate in IMF programme, the concentration ratio exhibits a positive relationship with bank efficiency levels, implying that the more concentrated banking system which participates in IMF programme is relatively more efficient in their intermediation function during the post-crisis period.

Keywords: bank efficiency; banking; DEA; data envelopment analysis; ASEAN-4; Association of Southeast Asian Nations; Indonesia; Malaysia; Philippines; Thailand; multivariate regression analysis; 1997 Asian financial crisis; finance industry; intermediation; revenue approach; concentrated banking markets; IMF programmes; International Monetary Fund; economics; management; service industries; concentration ratios.

DOI: 10.1504/IJSEM.2010.030917

International Journal of Services, Economics and Management, 2010 Vol.2 No.2, pp.148 - 179

Published online: 12 Jan 2010 *

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