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On the Sources of Heterogeneity in Banking Efficiency Literature

Aiello, Francesco and Bonanno, Graziella (2014): On the Sources of Heterogeneity in Banking Efficiency Literature.

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Abstract

This study reviews the empirical literature on banking efficiency by conducting a meta-regression analysis. The metadata-set consists of 1,661 observations retrieved from 120 papers published over the period 2000-2014. While the role of study-design and method-specific characteristics of primary studies is evaluated, a focus concerns regulation in banking. Results are fourfold. Firstly, parametric methods always yield lower levels of banking efficiency than nonparametric studies. Secondly, banking efficiency is high in studies using the value added approach instead of the intermediation method. Thirdly, efficiency scores also depend on the ranking journals and on the number of observations and variables used in the primary papers. Finally regulation matters: primary papers focusing on countries with a liberalized banking industry provide high values of efficiency scores.

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