Title: The effect of bank reforms and regulation on cost efficiency in emerging economies: a comparative analysis of Egypt and Turkey

Authors: Monal Abdel-Baki

Addresses: Department of Economics, School of Business, The American University in Cairo, AUC Avenue, P.O. Box 74, New Cairo 11835, Egypt

Abstract: This research examines the effects of bank reforms and regulatory controls recently enacted by emerging economies on cost efficiency of banks. The Stochastic Frontier Analysis (SFA) is applied to the cases of Turkey and Egypt since both of these emerging markets adopted similar bank reforms directly prior to the global financial meltdown. The results are uniform, proving that banking consolidation and supervision helped improve cost efficiency in both economies. Large banks are the least efficient leading to the conclusion that they are outsized. The most efficient banks are medium-sized, entailing that further bank concentration is apt to intensify diseconomies of scale.

Keywords: banking efficiency; financial crisis; banking regulation; banking consolidation; emerging economies; bank reform; Egypt; Turkey; cost efficiency; regulatory controls; stochastic frontier analysis; banking supervision.

DOI: 10.1504/IJEPEE.2011.040916

International Journal of Economic Policy in Emerging Economies, 2011 Vol.4 No.3, pp.227 - 244

Published online: 11 Jan 2015 *

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