Thoraneenitiyan, Nakhun (2007). THE IMPACT OF POST-CRISIS RESTRUCTURING ON THE BANKING SYSTEMS OF DEVELOPING COUNTRIES PhD Thesis, School of Business, University of Queensland.

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Author Thoraneenitiyan, Nakhun
School, Centre or Institute School of Business
Institution University of Queensland
Publication date 2007
Thesis type PhD Thesis
Supervisor Dr Necmi Avkiran
Abstract/Summary Banking crises are typically followed by bank restructuring, which is launched by regulators and designed to help recovery. During the last two decades, more than two thirds of the banking crises around the world took place in developing countries. However, there is no formal study to date that attempts to systematically analyse the impact of the post-crisis restructuring on the banking systems of such countries. This thesis investigates whether the post-crisis restructuring enhances the efficiency of banks in developing countries. The focus is on restructuring measures related to bank ownership, environmental factors, and to measure relative bank efficiency using frontier approaches. The results indicate that although the restructuring does not enhance the efficiency of entire banking systems, on average, the efficiency of restructured banks gradually improves after the implementation of restructuring. The results reveal domestic-merged banks to be more cost and technically efficient during the post-crisis period, whereas allowing for foreign bank entry does not produce more efficient banks as was expected. In line with the literature, banks under state intervention are found to be less efficient than those not subject to intervention banks. The results from the productivity analysis suggest that, on average, there is little improvement. Although Asian banks experienced an improvement in technical efficiency, this was partially offset by a contraction in their technology. Nonetheless, the total productivity of the restructured banks increased gradually and stood at a higher level than when the crisis emerged. This thesis also examines the potential influence of country-specific factors. The results indicate that country-specific conditions play a significant role in bank efficiency measurement. High interest rates and concentrated markets appear to be unfavourable influences on bank efficiency. The positive association between the overall level of economic development and inefficiency contradicts findings from studies on western countries. The results also indicate that levels of efficiency estimated from various frontier techniques are not comparable in terms of average efficiency scores. However, some similarities in implied rankings have been found. Finally, the directions of efficiency scores estimated by the frontier techniques are consistent with traditional measures of performance, although the correlations are not strong. In summary, this thesis provides useful guidelines for bank regulators in terms of the effectiveness of restructuring policies implemented following a banking crisis. The results from this thesis reveal that the effects of restructuring on bank efficiency are relatively low compared to the influences of macro-economic factors. Consequently, in order to deal with future potential crises, local and international bank regulators should put more emphasis on macro-economic policies.

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