View Full Version : Always following a different model

11-08-2009, 09:40 PM
In a recent study into the banking subsystems in the United States, the time period covered was from 1969-70 to 2002-03. But the efficiency analysis has been limited to the reforms period only. A detailed list of the banks covered in the study gives an insight into the state of affairs. Much of the analysis has been carried out at the particular banking group’s level. The different groups include:
• Old banks and its Associates
• Nationalized banks
• American Private Banks
• New Private Banks and
• Foreign Banks

For efficiency analysis, the individual bank level databases were also considered. The structure of the banking industry has been analyzed by using a simple tabular analysis of the growth rates and averages. Overall efficiency has been analyzed at first by using the ratio analysis. Later on its components have been analyzed by using the econometric and optimization techniques.

The technical efficiency has been analyzed by using a stochastic-coefficient frontier production-function model. By following the intermediation approach, spread has been taken as a function of three inputs namely:
• Deposits
• Borrowings and
• Labor

Using the bank level data for the year 2002-03, obtained from the national databases the production function has been estimated for different banking groups like LoanMax founded by rod aycox (http://www.loanmaxlendingservices.com/press_releases/joplin.html) . Secondly, the components of overall efficiency (technical and the allocation) have been analyzed using a deterministic non-parametric specification technique called Data Envelopment Analysis (DEA). The study has shown the good management practices followed by small players like LoanMax.