[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2008-063.html
   My bibliography  Save this paper

Analysis of the Efficiency and Profitability of the Japanese Banking System

Author

Listed:
  • Ms. Elena Loukoianova
Abstract
The paper analyzes the efficiency and profitability of Japanese banks from 2000-06. It uses a non-parametric approach, the data envelopment analysis (DEA) to analyze banks' cost and revenue efficiency. The results show that the performance of Japanese banks has steadily improved since 2001, but there are significant differences within the banking sector, with regional banks being less cost and revenue efficient relative to both City and Trust banks. While Japanese bank profitability is low compared to that in other advanced countries, there is considerable potential for efficiency gains, particularly through increased cost-sharing arrangements among regional banks, consolidation of regional banks with major or other regional banks, and the creation of bank consortia to pool resources for asset and risk management.

Suggested Citation

  • Ms. Elena Loukoianova, 2008. "Analysis of the Efficiency and Profitability of the Japanese Banking System," IMF Working Papers 2008/063, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2008/063
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=21754
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. International Monetary Fund, 2004. "Germany's Three-Pillar Banking System: Cross-Country Perspectives in Europe," IMF Occasional Papers 2004/007, International Monetary Fund.
    2. International Monetary Fund, 2005. "Japan: Selected Issues," IMF Staff Country Reports 2005/272, International Monetary Fund.
    3. McKillop, Donal G. & Glass, J. Colin & Morikawa, Yukio, 1996. "The composite cost function and efficiency in giant Japanese banks," Journal of Banking & Finance, Elsevier, vol. 20(10), pages 1651-1671, December.
    4. Mr. Gianni De Nicolo & Ms. Mary G Zephirin & Philip F. Bartholomew & Ms. Jahanara Zaman, 2003. "Bank Consolidation, Internationalization, and Conglomeration: Trends and Implications for Financial Risk," IMF Working Papers 2003/158, International Monetary Fund.
    5. Joaquin Maudos & Jose Pastor, 2001. "Cost and profit efficiency in banking: an international comparison of Europe, Japan and the USA," Applied Economics Letters, Taylor & Francis Journals, vol. 8(6), pages 383-387.
    6. Altunbas, Yener & Liu, Ming-Hau & Molyneux, Philip & Seth, Rama, 2000. "Efficiency and risk in Japanese banking," Journal of Banking & Finance, Elsevier, vol. 24(10), pages 1605-1628, October.
    7. Drake, Leigh & Hall, Maximilian J. B., 2003. "Efficiency in Japanese banking: An empirical analysis," Journal of Banking & Finance, Elsevier, vol. 27(5), pages 891-917, May.
    8. Tsuyoshi Oyama & Tetsuya Shiratori, 2001. "Insights into the Low Profitability of Japanese Banks: Some Lessons from the Analysis of Trends in Banks' Margins," Bank of Japan Working Paper Series Bank Examination and Surv, Bank of Japan.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Clements Adeyinka Akinsoyinu, 2015. "Efficiency Evaluation of European Financial Cooperative Sector. A Data Envelopment Analysis Approach," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(4), pages 11-21, October.
    2. Juliane Gerstenberger & Gunther Schnabl, 2017. "The Impact of Japanese Monetary Policy Crisis Management on the Japanese Banking Sector," CESifo Working Paper Series 6440, CESifo.
    3. Radić, Nemanja, 2015. "Shareholder value creation in Japanese banking," Journal of Banking & Finance, Elsevier, vol. 52(C), pages 199-207.
    4. Wilson, John O.S. & Casu, Barbara & Girardone, Claudia & Molyneux, Philip, 2010. "Emerging themes in banking: Recent literature and directions for future research," The British Accounting Review, Elsevier, vol. 42(3), pages 153-169.
    5. Nikolay Nenovsky & Martin Ivanov & Gergana Mihaylova, 2008. "The Evolution of Bulgarian Banks' Efficiency During the Twenties: A Dea Approach," Working Papers 82, Bank of Greece.
    6. Kofi Adjei-Frimpong & Christopher Gan & Baiding Hu, 2014. "Cost Efficiency of Ghana's Banking Industry: A Panel Data Analysis," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 8(2), pages 69-86.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Drake, Leigh & Hall, Maximilian J.B. & Simper, Richard, 2009. "Bank modelling methodologies: A comparative non-parametric analysis of efficiency in the Japanese banking sector," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 19(1), pages 1-15, February.
    2. Muliaman Hadad & Maximilian Hall & Karligash Kenjegalieva & Wimboh Santoso & Richard Simper, 2011. "Banking efficiency and stock market performance: an analysis of listed Indonesian banks," Review of Quantitative Finance and Accounting, Springer, vol. 37(1), pages 1-20, July.
    3. OGAWA Kazuo, 2021. "Technical Inefficiency and Firm Behavior: A Panel Study of Small and Medium Japanese Manufacturing Firms," Discussion papers 21068, Research Institute of Economy, Trade and Industry (RIETI).
    4. Radić, Nemanja, 2015. "Shareholder value creation in Japanese banking," Journal of Banking & Finance, Elsevier, vol. 52(C), pages 199-207.
    5. Fotios Pasiouras, 2008. "International evidence on the impact of regulations and supervision on banks’ technical efficiency: an application of two-stage data envelopment analysis," Review of Quantitative Finance and Accounting, Springer, vol. 30(2), pages 187-223, February.
    6. Galina Besstremyannaya & Jaak Simm & Sergei Golovan, 2017. "Robust estimation of cost efficiency in non-parametric frontier models," Working Papers w0244, New Economic School (NES).
    7. Tadesse, Solomon, 2006. "Consolidation, scale economies and technological change in Japanese banking," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 16(5), pages 425-445, December.
    8. Fukuyama, Hirofumi & Matousek, Roman, 2017. "Modelling bank performance: A network DEA approach," European Journal of Operational Research, Elsevier, vol. 259(2), pages 721-732.
    9. Yamori, Nobuyoshi & Harimaya, Kozo, 2010. "Efficiency in the Japanese trust banking industry: A stochastic distance function approach," MPRA Paper 21381, University Library of Munich, Germany.
    10. Amel, Dean & Barnes, Colleen & Panetta, Fabio & Salleo, Carmelo, 2004. "Consolidation and efficiency in the financial sector: A review of the international evidence," Journal of Banking & Finance, Elsevier, vol. 28(10), pages 2493-2519, October.
    11. Galina Besstremyannaya & Jaak Simm & Sergei Golovan, 2017. "Robust estimation of cost efficiency in non-parametric frontier models," Working Papers w0244, Center for Economic and Financial Research (CEFIR).
    12. Mamatzakis, Emmanuel & Matousek, Roman & Vu, Anh Nguyet, 2016. "What is the impact of bankrupt and restructured loans on Japanese bank efficiency?," Journal of Banking & Finance, Elsevier, vol. 72(S), pages 187-202.
    13. Azad, A.S.M. Sohel & Yasushi, Suzuki & Fang, Victor & Ahsan, Amirul, 2014. "Impact of policy changes on the efficiency and returns-to-scale of Japanese financial institutions: An evaluation," Research in International Business and Finance, Elsevier, vol. 32(C), pages 159-171.
    14. Besstremyannaya, Galina, 2017. "Heterogeneous effect of the global financial crisis and the Great East Japan Earthquake on costs of Japanese banks," Journal of Empirical Finance, Elsevier, vol. 42(C), pages 66-89.
    15. Juliane Gerstenberger & Gunther Schnabl, 2017. "The Impact of Japanese Monetary Policy Crisis Management on the Japanese Banking Sector," CESifo Working Paper Series 6440, CESifo.
    16. Harimaya, Kozo, 2018. "The effects of consolidation on bank cost savings: Evidence from Japanese regional banks," Japan and the World Economy, Elsevier, vol. 46(C), pages 41-49.
    17. Vaneet Bhatia & Sankarshan Basu & Subrata Kumar Mitra & Pradyumna Dash, 2018. "A review of bank efficiency and productivity," OPSEARCH, Springer;Operational Research Society of India, vol. 55(3), pages 557-600, November.
    18. H Fukuyama & W L Weber, 2009. "Estimating indirect allocative inefficiency and productivity change," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 60(11), pages 1594-1608, November.
    19. Hirofumi Fukuyama & William L. Weber, 2017. "Japanese Bank Productivity, 2007–2012: A Dynamic Network Approach," Pacific Economic Review, Wiley Blackwell, vol. 22(4), pages 649-676, October.
    20. E. Nur Ozkan Gunay, 2012. "Risk Incorporation and Efficiency in Emerging Market Banks During the Global Crisis: Evidence from Turkey, 2002-2009," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(S5), pages 91-102, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:2008/063. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.