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Title: The impact of bank regulation on bank competition and efficiency : an empirical study of Asian economies in the post-crisis period
Author: Deng, Bimei
Awarding Body: University of Reading
Current Institution: University of Reading
Date of Award: 2013
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Following the 1997 Asian financial crisis, banking sector reforms in Asia have been characterised by an increasing emphasis on prudential regulations, concomitant with the further liberalisation of the banking system. This thesis explores how the coexistence of deregulation and prudential re-regulation affects banks' cost characteristics and competitiveness. We address our research questions using a panel data set of commercial banks from nine major Asian economies - comprising both developed countries (Hong Kong and Japan); transitional economies that were badly hit by the 1997 crisis (Thailand, Indonesia, the Philippines and Malaysia) and other transitional economies (China, India and Vietnam) over the period 2001-2010. We apply a stochastic frontier approach followed by the estimation of a deterministic meta-frontier to provide "true" estimates of comparable bank-level cost efficiency. This approach allows us to account for heterogeneity of technologies across countries. In addition, we apply a new approach - the "competition efficiency" approach - to provide reliable and consistent estimations of market competitiveness. Our analysis shows that the Asian banking market experienced a considerable increase in competition and cost efficiency; some countries also saw a reduction of differences in performance among various ownerships. The observed outcomes seem to be primarily driven by bank deregulation that relaxes interest rate control, enhances private entry and foreign penetration, and facilitates capital allocation. However, there is no evidence that bank re-regulation improves bank cost efficiency. Our results highlight four policy issues facing regulatory authorities. Firstly, there is potentially a negative impact of some re-regulatory instruments on bank intermediation. Secondly, the lack of competition is still an issue in some Asian countries, such as the Philippines, Vietnam and Indonesia. In addition, poor cost performance still affects banks in Malaysia, the Philippines and Hong Kong. Despite the efforts of Asian authorities in reforming their countries' financial sectors, the progress of competition and efficiency appears to be slowing down in recent years. Finally, there are signs that the formation of an oligopolistic market structure and the creation of financial conglomerates weaken competition and efficiency.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available