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Efficiency, productivity growth and profitability of Korean banks

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Frame of Image el: 573-651-2942, Fax: 573-651-2947, e-mail: khpark@semo.edu
<Contents>
Ⅰ. Introduction ……………………………….………………………...………..1 Ⅱ. Liberalization, Crisis, and Restructuring in the Korean Banking System …………………………...……………...…. 4 Ⅲ. Review of Previous Studies on Korean Banking ……………..………..…...7 Ⅳ. Methodology ……………………………………………...……..…………..10 Ⅴ. Data and Empirical Estimates: Efficiency and Productivity …………….19 Ⅵ. Profitability Estimation Model …………………………………...………..31 Ⅶ. Data and Empirical Estimates: Profitability ……………………...………33 Ⅷ. Conclusions ……………………………………………………...…………..44
References …………….……………………………………………………..…..50 Appendix ...…………………………………………………………...………….68
Efficiency, Productivity Growth and Profitability of Korean Banks
In this paper we present estimates of efficiency, productivity change and profitability in Korean banking for the period of 1992-2002 when the Korean banking system experienced financial liberalization, financial crisis and restructuring. The estimates for efficiency and productivity change of individual banks and the banking industry as a whole are derived from the directional technology distance function. Our method allows the aggregation of individual bank efficiency and productivity growth to the industry level. This method also controls for loan losses (non-performing loans) that are an undesirable byproduct arising from the production of loans. These two features of our paper, aggregation of efficiency and productivity measures from the firm to the indust


Full Text
Title Efficiency, productivity growth and profitability of Korean banks
Similar Titles
Material Type Reports
Author(English)

Park, Kang H.; Weber, William L.

Publisher

[Seoul]:The Bank of Korea

Date 2006-11
Pages 76
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Holding The Bank of Korea; KDI School

Abstract

In this paper we present estimates of efficiency, productivity change and profitability in Korean banking for the period of 1992-2002 when the Korean banking system experienced financial liberalization, financial crisis and restructuring. The estimates for efficiency and productivity change of individual banks and the banking industry as a whole are derived from the directional technology distance function. Our method allows the aggregation of individual bank efficiency and productivity growth to the industry level. This method also controls for loan losses (non-performing loans) that are an undesirable by-product arising from the production of loans. These two features of our paper, aggregation of efficiency and productivity measures from the firm to the industry level and the modeling of desirable and undesirable bank outputs, are our unique contribution to the study of the Korean banking system. (The rest omitted)