Does bank efficiency matter? Market value relevance of bank efficiency in Australia

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Title Does bank efficiency matter? Market value relevance of bank efficiency in Australia
Author Shamsuddin, Abul; Xiang, Dong
Journal Name Applied Economics
Year Published 2012
Place of publication United Kingdom
Publisher Routledge
Abstract The stochastic frontier analysis is employed to investigate efficiency of publicly listed Australian banks over the period 1985 to 2008. The results suggest that technical, cost and profit efficiency of Australian banks have improved over time. Large banks have attained a higher level of cost efficiency but a lower level of technical efficiency compared to small banks. No substantial difference between the two groups is found in terms of profit efficiency. A panel regression of bank stock return on bank efficiency suggests that an improvement in technical, cost or profit efficiency contributes to the market value of a bank. Thus, the shareholder wealth maximization goal is aligned with the goal of maximizing bank efficiency in the Australian context.
Peer Reviewed Yes
Published Yes
Alternative URI http://dx.doi.org/10.1080/00036846.2011.577027
Copyright Statement Copyright 2012 Taylor & Francis. This is an electronic version of an article published in Applied Economics, Vol. 44 (47), 2012, pp. 3563-3572. Applied Economicsis available online at: http://www.tandfonline.com with the open URL of your article.
Volume 44
Issue Number 27
Page from 3563
Page to 3572
ISSN 0003-6846
Date Accessioned 2012-10-04
Language en_US
Faculty Griffith Business School
Subject Financial Economics
URI http://hdl.handle.net/10072/48219
Publication Type Journal Articles (Refereed Article)
Publication Type Code c1

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