VARIATON OF BANKING COST EFFICIENCIES IN CENTRAL ASIA AND MONGOLIA

In this paper we seek to investigate differences between banking cost efficiencies among commercial banks in Central Asian countries and Mongolia. In analysis different approaches to liberalization and natural resources exporting characteristics of these countries have been focused as one of the main determinants for cost efficiency variation. Cost efficiency scores estimations are based on transcendental logarithmic stochastic frontier panel data model proposed by Battese & Coelli (1995). Dataset used in the study includes period of 2007-2013. Results indicate that less liberalization policy in the banking systems cause low intensity of competition, which in turn characterized by monopolization of banking sectors by large state owned banks. This tendency results in the low efficiency of commercial banks. Monopolization along with the relative abundance of financial resources accumulated through the export of natural resources and constraints on banking activity may lead to a situation described as “quiet life hypothesis”.

Anahtar Kelimeler:

liberalization, frontier efficiency, banking, Central Asia

VARIATON OF BANKING COST EFFICIENCIES IN CENTRAL ASIA AND MONGOLIA

Keywords:

liberalization, frontier efficiency, banking, Central Asia,

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