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Estimating the speed of adjustment of European banking efficiency under a quadratic loss function
journal contribution
posted on 2023-06-08, 12:01 authored by Anastasia Koutsomanoli-Fillipaki, Emmanuel C MamatzakisThis paper investigates the speed of adjustment of cost efficiency to equilibrium level in the European banking industry. Our analysis provides for the first time insights into the process of convergence across European banking markets as measured by the speed of adjustment of cost efficiency. In particular, we employ a quadratic loss function specification based on forward-looking rational expectations to model the underlying dynamics of efficiency scores in the banking industry of the EU-15 region over the period 1998–2005. Results show that there is considerable variation in the speed of adjustment across banking systems, while over time it appears that continuing efforts to advance financial integration have led to some improvement in the speed of adjustment to the long-run equilibrium.
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Publication status
- Published
Journal
Economic ModellingISSN
0264-9993Publisher
ElsevierExternal DOI
Issue
1Volume
27Page range
1-11Department affiliated with
- Business and Management Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2012-07-03Usage metrics
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