1. Bank efficiency in Latin America

  1. Fotios Pasiouras
  1. Philip Molyneux and
  2. Jonathan Williams

Published Online: 6 MAY 2013

DOI: 10.1002/9781118541531.ch1

Efficiency and Productivity Growth: Modelling in the Financial Services Industry

Efficiency and Productivity Growth: Modelling in the Financial Services Industry

How to Cite

Molyneux, P. and Williams, J. (2013) Bank efficiency in Latin America, in Efficiency and Productivity Growth: Modelling in the Financial Services Industry (ed F. Pasiouras), John Wiley & Sons, Ltd, Chichester, UK. doi: 10.1002/9781118541531.ch1

Editor Information

  1. University of Surrey, UK and Technical University of Crete, Greece

Author Information

  1. Bangor Business School, Bangor University, UK

Publication History

  1. Published Online: 6 MAY 2013
  2. Published Print: 6 MAY 2013

ISBN Information

Print ISBN: 9781119967521

Online ISBN: 9781118541531

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Keywords:

  • bank efficiency;
  • privatisation;
  • foreign banks;
  • Latin America

Summary

This chapter investigates the efficiency features of Latin American banking systems using a variety of effects models that aim to ensure that heterogeneity is not confounded with inefficiency measures. Using a preferred effects model, we find that bank cost efficiency generally deteriorated between 1985–1993 and 1994–2000 and this was particularly pronounced for state-owned institutions. The period up to 2006 experienced widespread foreign bank expansion in the region, reflecting a strengthened economic operating environment with cost efficiency generally improving over this period. Since the 2007 crisis, cost efficiency appears to have either stabilised (foreign-owned banks) or mildly fallen (private banks). An interesting feature of our findings is that de novo foreign bank entry appears to be more cost efficient compared to entry via mergers and acquisition (M&A).