The University of Southampton
University of Southampton Institutional Repository

The impact of regulatory reform on cost and revenue efficiency of a bank: perspective from the Middle East and North Africa (MENA) countries

The impact of regulatory reform on cost and revenue efficiency of a bank: perspective from the Middle East and North Africa (MENA) countries
The impact of regulatory reform on cost and revenue efficiency of a bank: perspective from the Middle East and North Africa (MENA) countries
This paper examines the effects of the three pillars of the Basel II namely, capital regulations, official supervisory power and market discipline, plus activity restrictions and deposit insurance on cost and revenue efficiency of a bank. The theoretical and empirical literature about the relationships between bank regulations and bank efficiency are largely inconclusive. A nonparametric data envelopment analysis (DEA) is used to obtain the efficiency, and truncated maximum likelihood estimation technique is used to examine the impact of bank regulations on bank efficiency in the context of 132 commercial banks from 12 Middle East and North Africa (MENA) countries. The study results suggest that capital stringency has a positive effect on cost efficiency and activity restrictions show similar effect on revenue efficiency. Moreover, official supervisory power improves cost efficiency and reduces revenue efficiency. On the contrary, market discipline mechanisms reduce cost efficiency and improve revenue efficiency. Finally, deposit insurance reduces both cost and revenue efficiency.
Key Words: Bank regulations; Basel II, cost and revenue efficiency; MENA countries
JEL Classifications: G21, G28, G32
Haque, Faizul
8153d83c-427a-4f73-860d-dd7e9460533d
Haque, Faizul
8153d83c-427a-4f73-860d-dd7e9460533d

Haque, Faizul (2014) The impact of regulatory reform on cost and revenue efficiency of a bank: perspective from the Middle East and North Africa (MENA) countries. Paris Financial Management Conference 2014, IPAG Business School, Paris, France, Paris, France. 15 - 16 Dec 2014.

Record type: Conference or Workshop Item (Paper)

Abstract

This paper examines the effects of the three pillars of the Basel II namely, capital regulations, official supervisory power and market discipline, plus activity restrictions and deposit insurance on cost and revenue efficiency of a bank. The theoretical and empirical literature about the relationships between bank regulations and bank efficiency are largely inconclusive. A nonparametric data envelopment analysis (DEA) is used to obtain the efficiency, and truncated maximum likelihood estimation technique is used to examine the impact of bank regulations on bank efficiency in the context of 132 commercial banks from 12 Middle East and North Africa (MENA) countries. The study results suggest that capital stringency has a positive effect on cost efficiency and activity restrictions show similar effect on revenue efficiency. Moreover, official supervisory power improves cost efficiency and reduces revenue efficiency. On the contrary, market discipline mechanisms reduce cost efficiency and improve revenue efficiency. Finally, deposit insurance reduces both cost and revenue efficiency.
Key Words: Bank regulations; Basel II, cost and revenue efficiency; MENA countries
JEL Classifications: G21, G28, G32

This record has no associated files available for download.

More information

Published date: 15 December 2014
Venue - Dates: Paris Financial Management Conference 2014, IPAG Business School, Paris, France, Paris, France, 2014-12-15 - 2014-12-16

Identifiers

Local EPrints ID: 446431
URI: http://eprints.soton.ac.uk/id/eprint/446431
PURE UUID: be4dcc0d-69b9-474e-8463-74cacd08e4e7
ORCID for Faizul Haque: ORCID iD orcid.org/0000-0003-1556-3466

Catalogue record

Date deposited: 09 Feb 2021 17:31
Last modified: 13 Dec 2021 03:41

Export record

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of http://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×