The Determinants of Bank Cost Inefficiency in ASEAN Banking (Penentu Ketidakcekapan Kos Bank dalam Perbankan di ASEAN)

Izah Mohd Tahir, Abdul Mongid, Sudin Haron

Abstract


ABSTRACT

This study examines the determinants of cost inefficiency of banks operating in 6 member countries of the Association of Southeast Asian Nations (ASEAN): Indonesia, Malaysia, Singapore, Thailand, the Philippines, and Vietnam. First, we estimate the cost inefficiency using the Stochastic Frontier Analysis. Second, we regress the estimated cost inefficiencies on a set of bank specific variables (size, equity to total asset, loan to total asset, personnel expenses to total expenses) and environmental variables (corruption, economic growth and economic freedom) using a Tobit regression analysis. We use a panel dataset of 625 banks in the ASEAN countries for the period from 2003 to 2008. Our results show that the average cost inefficiency during the period is about 33% of the observed total costs. Banks in Singapore exhibit the lowest cost inefficiency relative to banks in the other ASEAN countries. Our second stage results suggest that bank specific variables and economic growth are important determinants of bank cost inefficiencies in ASEAN banking. The impact of corruption and economic freedom is also evident, but only to a limited extent.

ABSTRAK

Kajian ini menyelidiki faktor-faktor yang menentukan ketidakcekapan kos bank di 6 buah negara ahli Persatuan Negara-negara Asia Tenggara (ASEAN); Indonesia, Malaysia, Singapura, Thailand, Filipina dan Vietnam. Pertama, ketidakcekapan kos dianggar menggunakan Analisis Sempadan Stokastik. Kedua, anggaran ketidakcekapan kos ini di regres ke atas beberapa pemboleh ubah spesifik bank (saiz, nisbah ekuiti kepada jumlah aset, nisbah pinjaman kepada jumlah aset, nisbah perbelanjaan staf kepada jumlah perbelanjaan) dan pemboleh ubah persekitaran (rasuah, pertumbuhan ekonomi dan kebebasan ekonomi) menggunakan analisis regresi Tobit. Data panel bagi 625 bank di ASEAN untuk tempoh masa dari 2003 hingga 2006 digunakan untuk tujuan analisis ini. Keputusan menunjukkan ketidakcekapan kos dalam tempoh ini adalah sebanyak 33 peratus. Bank-bank di Singapura menunjukkan ketidakcekapan kos yang paling rendah berbanding dengan bank-bank di negara ASEAN lain. Keputusan seterusnya menggambarkan pemboleh ubah spesifik bank dan pertumbuhan ekonomi adalah penentu penting kepada ketidakcekapan kos di ASEAN. Peranan rasuah dan kebebasan ekonomi juga diperlihatkakan, namun pada tahap yang terhad.


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