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Risk and efficiency in East Asian banks (English)

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  • Risk and efficiency in East Asian banks (English)
  • Laeven, Luc
  • World Bank (WB)


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Title Risk and efficiency in East Asian banks (English)
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Material Type Reports
Author(English)

Laeven, Luc

Publisher

World Bank (WB)

Date 1999
Language English
File Type Link

Abstract

The author uses a linear programming technique (data envelopment analysis) to estimate the inefficiencies of banks in Indonesia, the Republic of Korea, Malaysia, the Philippines, and, Thailand. He applies this technique to the pre-crisis period 1992-96... See More +. Assessing a Bank's overall performance requires assessing both efficiency and risk factors, so the author also introduces a measure of risk taking. This risk measure helps predict which banks were restructured after the crisis of 1997. The author finds that foreign-owned banks took little risk relative to other banks in East Asia, and that family-owned and company-owned banks were among the highest-risk takers. Banks restructured after the 1997 crisis had excessive credit growth, were mostly family-owned or company-owned, and were almost never foreign-owned.