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Bank efficiency, competition and the Southeast Asian financial crisis

Khan, Shazida jan Mohd (2011) Bank efficiency, competition and the Southeast Asian financial crisis. PhD thesis, Prifysgol Bangor University.

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Abstract

The financial crisis which hit Southeast Asian countries in July 1997 had a significant impact on the countries' economies and forced governments in the region to undertake programmes of financial restructuring in order to reduce weaknesses in banks' balance sheets, stabilise currencies and, most importantly, to improve the soundness of the banking and financial sectors. The main aim of such policies was to restore confidence and help meet the ongoing challenges associated with financial innovation and globalisation. The causes and consequences of the Asian crisis have been studied extensively in the past decade. However, the literature on the impact of the post-crisis crisis restructuring programmes on bank efficiency, performance and competition, and their evolving relationships, remain rather limited and inconclusive. This study aims to shed some light on these interrelated aspects, with particular reference to the experience of six of the countries mostly affected by the crisis - Indonesia, Korea, Malaysia, Philippines and Thailand - during their recovery period (1999 to 2005). Results from the efficiency analysis, carried out by means of Data Envelopment Analysis (DEA), show evidence of efficiency improvements in the region thereby indicating a positive impact of the restructuring programmes on the banking sector. Between 1999 to 2005 most of the countries in our sample actively followed policies of either closing failing institutions or fostering mergers. As a consequence, bank concentration in the region increased, raising the issue of the impact of the restructuring programmes on the competitive structure of banking markets. We found that, despite increased concentration, competition (assessed by the Panzar-Rosse Hstatistic) also increased leading us to conclude that the structural changes in South East Asia improved the region's banking industry performance without resulting in banks enjoying excessive market power. These lessons from the Asian crisis may prove valuable in the light of current re-structuring of global banking systems in the light of the 2008 credit crisis.

Item Type: Thesis (PhD)
Subjects: Degree Thesis
Departments: College of Business, Law, Education and Social Sciences > Bangor Business School
Degree Thesis
Date Deposited: 14 May 2015 05:21
Last Modified: 07 Apr 2016 09:35
URI: http://e.bangor.ac.uk/id/eprint/4529
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