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Keywords:

  • Banks;
  • Cost Efficiency;
  • DEA

This paper aims to evaluate the cost efficiency of banks in the Asia-Pacific region and test whether the operating performance of banks in poorer economies improves with the inclusion of environmental proxies. Our basic cost efficiency model finds that Australia and Singapore are the most cost efficient banking economies. With the inclusion of environmental factors into our model, the relative cost performance of banks from poorer economies does not improve, perhaps suggesting that their weaker operating environment is not the cause of the banks' lower results.