콘텐츠 바로가기
로그인
컨텐츠

Category Open

Resources

tutorial

Collection of research papers and materials on development issues

home

Resources
Economy Financial Policy

Print

An empirical investigation of the efficiency and scale economies of commercial banks in Korea

Related Document
Frame of Image


Full Text
Title An empirical investigation of the efficiency and scale economies of commercial banks in Korea
Similar Titles
Material Type Reports
Author(English)

Kwack, Sung Yeung; Wadja, Patrice K.

Publisher

[Seoul]:Korea Institute of Finance

Date 2001-09
Series Title; No 금융조사보고서 / 2001-04
Pages 86
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Holding kif; KDI School

Abstract

This study estimates the coefficients of the translog cost fuction of two outputs and four inputs with cross section and time series data of Korean commercial banks during the period of 1985 to 1997. The results indicate economies of scale are increasing for loans and securities, slight diseconomies of scale for non-interest income yielding services, and inelastic demands for factor inputs. Labor and business fixed assets are highly substitutes. Domestic deposits are estimated to be substitutes of labor and business fixed assets at a moderate level. Foreign deposits have a very low level of complementary relationship with each of labor, business fixed assets, and domestic deposits. During the period of 1985 to 1997, Korean banks’ cost efficiency is estimated to be 0.8. A significant rise in the return to scale is made from 1985 to 1997. No significant reduction is achieved in the inefficiency in banking. This may suggest that the financial decontrols and liberalization policy of the government contributed to the growth in bank activity and provided an environment favorable for more efficient operations in banking.