Revisiting the quiet life hypothesis in banking using nonparametric techniques
Early studies testing the quiet life hypothesis in banking found strong evidence that banks in more concentrated markets exhibit lower cost efficiency levels. More recent studies have reexamined the issue in different contexts with mixed results. These approaches are based on stipulating a linear re...
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| Format: | Article |
| Language: | English |
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Vilnius Gediminas Technical University
2014-12-01
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| Series: | Journal of Business Economics and Management |
| Subjects: | |
| Online Access: | https://journals.vgtu.lt/index.php/JBEM/article/view/2718 |
| _version_ | 1818913980995862528 |
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| author | Rolf Färe Shawna Grosskopf Joaquín Maudos Emili Tortosa-Ausina |
| author_facet | Rolf Färe Shawna Grosskopf Joaquín Maudos Emili Tortosa-Ausina |
| author_sort | Rolf Färe |
| collection | DOAJ |
| description | Early studies testing the quiet life hypothesis in banking found strong evidence that banks in more concentrated markets exhibit lower cost efficiency levels. More recent studies have reexamined the issue in different contexts with mixed results. These approaches are based on stipulating a linear relationship between market power and efficiency in banking, which might be problematic, as suggested by the literature on efficiency analysis. We explore how bank cost efficiency measures are related to market power using flexible techniques, which are more consistent with those employed to measure efficiency in the first stage of the analysis. Our study focuses on the Spanish banking industry, which has been experiencing substantial change in the last few years, combining institutions with different ownership structures and business models. Results show that the relationship varies according to the level of market power, the component of efficiency evaluated (cost, technical or allocative) and the type of banking firm (commercial bank or savings bank), suggesting that the quiet life might be a reality only for some financial institutions. |
| first_indexed | 2024-12-19T23:39:07Z |
| format | Article |
| id | doaj.art-12c843a297e84e5e9973d526c4a7889e |
| institution | Directory Open Access Journal |
| issn | 1611-1699 2029-4433 |
| language | English |
| last_indexed | 2024-12-19T23:39:07Z |
| publishDate | 2014-12-01 |
| publisher | Vilnius Gediminas Technical University |
| record_format | Article |
| series | Journal of Business Economics and Management |
| spelling | doaj.art-12c843a297e84e5e9973d526c4a7889e2022-12-21T20:01:29ZengVilnius Gediminas Technical UniversityJournal of Business Economics and Management1611-16992029-44332014-12-0116110.3846/16111699.2012.726929Revisiting the quiet life hypothesis in banking using nonparametric techniquesRolf Färe0Shawna Grosskopf1Joaquín Maudos2Emili Tortosa-Ausina3Department of Economics and Department of Agricultural and Resource Economics, Oregon State University, Corvallis, USADepartment of Economics, Oregon State University, Corvallis, USADepartamento de Análisis Económico and Instituto Valenciano de Investigaciones Económicas (Ivie), Universitat de València, Avda. de los Naranjos, s/n, 46022 València, SpainDepartament d’Economia and Instituto Valenciano de Investigaciones Económicas (Ivie), Universitat Jaume I, Campus del Riu Sec, 12071 Castelló de la Plana, SpainEarly studies testing the quiet life hypothesis in banking found strong evidence that banks in more concentrated markets exhibit lower cost efficiency levels. More recent studies have reexamined the issue in different contexts with mixed results. These approaches are based on stipulating a linear relationship between market power and efficiency in banking, which might be problematic, as suggested by the literature on efficiency analysis. We explore how bank cost efficiency measures are related to market power using flexible techniques, which are more consistent with those employed to measure efficiency in the first stage of the analysis. Our study focuses on the Spanish banking industry, which has been experiencing substantial change in the last few years, combining institutions with different ownership structures and business models. Results show that the relationship varies according to the level of market power, the component of efficiency evaluated (cost, technical or allocative) and the type of banking firm (commercial bank or savings bank), suggesting that the quiet life might be a reality only for some financial institutions.https://journals.vgtu.lt/index.php/JBEM/article/view/2718bankingefficiencymarket powernonparametric regressionsavings bankLerner index |
| spellingShingle | Rolf Färe Shawna Grosskopf Joaquín Maudos Emili Tortosa-Ausina Revisiting the quiet life hypothesis in banking using nonparametric techniques Journal of Business Economics and Management banking efficiency market power nonparametric regression savings bank Lerner index |
| title | Revisiting the quiet life hypothesis in banking using nonparametric techniques |
| title_full | Revisiting the quiet life hypothesis in banking using nonparametric techniques |
| title_fullStr | Revisiting the quiet life hypothesis in banking using nonparametric techniques |
| title_full_unstemmed | Revisiting the quiet life hypothesis in banking using nonparametric techniques |
| title_short | Revisiting the quiet life hypothesis in banking using nonparametric techniques |
| title_sort | revisiting the quiet life hypothesis in banking using nonparametric techniques |
| topic | banking efficiency market power nonparametric regression savings bank Lerner index |
| url | https://journals.vgtu.lt/index.php/JBEM/article/view/2718 |
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