Journal Article
No. 2018-30 | May 14, 2018
Profit efficiency of banks in Colombia with undesirable output: a directional distance function approach

Abstract

This article analyzes the sources of bank efficiency in Colombia over the period 2000–2011. To perform this research, the authors propose a score of bank efficiency using the directional distance function, which was estimated using data envelopment analysis. Additionally, they use an ordered probit panel regression to explore the effects of some market-related and bank-specific factors on efficiency. The results show that the non-inclusion of non-performing loans (NPLs) leads to higher bank inefficiency indicators, which are significantly different from those obtained when NPLs are included. Further, they find that economic growth, capital risk, foreign and national banks, and account liquidity risk explain, in part, the efficiency of Colombian banks.

Data Set

JEL Classification:

D22, G21

Assessment

  • Downloads: 135 (Discussion Paper: 373)

Links

Cite As

Camilo Almanza and Jhon James Mora Rodríguez (2018). Profit efficiency of banks in Colombia with undesirable output: a directional distance function approach. Economics: The Open-Access, Open-Assessment E-Journal, 12 (2018-30): 1–18. http://dx.doi.org/10.5018/economics-ejournal.ja.2018-30


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