Measuring Cost Efficiency of Ukrainian Banks in 2008

Anatoliy Pilyavskyy; Yuriy Matsiv; Olga Vovchak

doi:10.2478/v10103-012-0036-4

Authors

Anatoliy Pilyavskyy Department of Management, Lviv Academy of Commerce
Yuriy Matsiv Department of Management, Lviv Academy of Commerce
Olga Vovchak Institute of Economics and Finance, Lviv Academy of Commerce

DOI:

https://doi.org/10.2478/v10103-012-0036-4

Abstract

The paper presents the results of a stochastic frontier analysis (SFA) of cost-efficiency of Ukrainian banks. As of lack of data on the personnel costs, we had to set limits to the year of 2008 only. To modeling banking activity, we apply the intermediary approach as one of the most commonly used in literature. Considering the results of statistical tests, we chose translog functional form of cost function and half–normal distribution of random inefficiency term. As a result of the research, we found out that efficiency of Ukrainian banks varies within 0.5224 and 0.9869 with an average value of 0.8734. Having checked a range of hypotheses, we discovered insignificant distinctions among banks by their size, type of owner and location.

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