Dergiler / Reforma / 2017 / Sayı: 75
COST EFFICIENCY AND LOAN QUALITY IN THE BANKING SECTOR OF KYRGYZSTAN
- Dergi
- Reforma
- Sayı
- 2017 · Sayı: 75
- Sayfa
- 32–42
- DOI
- —
Özet
The aim of this study is examine the relationship between cost efficiency and quality of the loan portfolio in the banking sector of Kyrgyzstan. This study adopt stochastic cost frontier approach proposed by Battese ve Coelli (1995) to unbalanced panel data set captured 23 commercial banks for period of 2000-2013. Inefficiency term assumed to be distributed as truncated normal. We used transcendental logarithmic functional form specification in approximation of the cost function. Inputs and outputs of banking are determined following to modified financial intermediation approach. Assessed cost efficiency scores of Kyrgyz banks calculated averagely at level of 0,766. Average cost efficiency scores of domestic, foreign and public banks are 0,848; 0,649 and 0,875, respectively. Overall results reveal some signs supporting "risk aversion" hypothesis and “bad luck” hypothesis, but to a lesser extent "moral hazard" hypothesis and “bad management” hypothesis.
Abstract
The aim of this study is examine the relationship between cost efficiency and quality of the loan portfolio in the banking sector of Kyrgyzstan. This study adopt stochastic cost frontier approach proposed by Battese ve Coelli (1995) to unbalanced panel data set captured 23 commercial banks for period of 2000-2013. Inefficiency term assumed to be distributed as truncated normal. We used transcendental logarithmic functional form specification in approximation of the cost function. Inputs and outputs of banking are determined following to modified financial intermediation approach. Assessed cost efficiency scores of Kyrgyz banks calculated averagely at level of 0,766. Average cost efficiency scores of domestic, foreign and public banks are 0,848; 0,649 and 0,875, respectively. Overall results reveal some signs supporting "risk aversion" hypothesis and “bad luck” hypothesis, but to a lesser extent "moral hazard" hypothesis and “bad management” hypothesis