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Capital Structure of Sme Sector in Bangladesh

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The Cost-Efficiency of French Banks∗
Estelle Brack†and Ramona Jimborean‡ First Draft: September 2008 This Version: April 2009

Abstract
The paper addresses the issue of French banks efficiency, compared to their homologous from Europe and the United States. The analysis is realized on a sample formed by the ten biggest banks from France, Germany, Italy, Spain, the United Kingdom and the United States, over the period 1994-2006. The Data Envelopment Analysis (DEA) method is employed. The results show an improvement in cost-efficiency of French and Spanish banks, while in the other countries a decline in cost-efficiency is noted. We proceed to several tests of convergence, showing that inefficient banks have reduced the gap during the period 1994-2006. In a second step analysis, we focus on the factors standing behind the efficiency scores obtained through DEA methodology. These are bank-specific variables, the macro environment, the regulatory regime and the non-bank financial sector development. We use a standard censured Tobit model and show that capitalized, newly established banks, with tighter ratios of Tier 1 capital and operating in a country with a lower GDP per capita record the highest cost-efficiency scores.

JEL Classification: C14, C6, D24, G21, L25 Keywords: Cost-efficiency; Banking systems; Data envelopment analysis

The authors gratefully acknowledge Serge Oppenchaim, C´line Choulet, Guillaume Guidoni and Julien e Geffroy for their contribution to this work. The views expressed in this paper are those of the authors and do not necessarily reflect the views of the French Banking Federation, nor those of Banque de France. † International Affairs Department, French Banking Federation, ebrack@fbf.fr. ‡ Monetary Policy Research Department, Banque de France, ramona.jimborean@banque-france.fr.



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