Title Main determinants of efficiency and implications on banking concentration in the European Union
Authors BAUTISTA MESA, RAFAEL JESÚS, MOLINA SÁNCHEZ, HORACIO, RAMÍREZ SOBRINO, JESÚS NICOLÁS, MOLINA SÁNCHEZ, HORACIO, RAMÍREZ SOBRINO, JESÚS NICOLÁS, BAUTISTA MESA, RAFAEL JESÚS
External publication No
Means Rev. Contab.
Scope Article
Nature Científica
SJR Quartile 4
SJR Impact 0.16800
Area International
Publication date 01/01/2014
ISI 000216781300008
DOI 10.1016/j.rcsar.2013.08.006
Abstract This study aims to measure the main determinants influencing bank efficiency. We suggest that the bank efficiency ratio, obtained from the income statement, is positively related to the size of a bank in terms of total assets. However, we believe that such a relationship cannot be maintained for banks over a certain size. By the use of the regression analysis method, we analyze the link between bank efficiency and bank size, using a sample of 3952 banks in the European Union. Our results show that the efficiency ratio stops improving for banks with total assets over $25 billion. Previous literature, using different analysis techniques, does not reach an agreement on this point. Furthermore, our study identifies further variables which negatively affect the efficiency of banks, such as competition and lending diversification, or affect them positively, such as the wholesale funding ratio and income diversification. Our findings imply the need for different bank policies depending on total assets, in order to limit the size and activities of banks. (C) 2013 ASEPUC. Published by Elsevier Espafia, S.L. All rights reserved.
Keywords Bank efficiency; Bank size; Concentration; Diversification; Wholesale funding; Capital ratio
Universidad Loyola members