Bank governance changes in Pakistan: is there a performance effect?

Burki, Abid A. and Ahmad, Shabbir (2010) Bank governance changes in Pakistan: is there a performance effect?. Journal of Economics and Business, 62 2: 129-146. doi:10.1016/j.jeconbus.2009.08.002


Author Burki, Abid A.
Ahmad, Shabbir
Title Bank governance changes in Pakistan: is there a performance effect?
Journal name Journal of Economics and Business   Check publisher's open access policy
ISSN 0148-6195
Publication date 2010
Sub-type Article (original research)
DOI 10.1016/j.jeconbus.2009.08.002
Open Access Status
Volume 62
Issue 2
Start page 129
End page 146
Total pages 18
Place of publication Philadelphia, PA, United States
Publisher Elsevier
Language eng
Abstract This paper investigates the performance effects of bank governance reforms in Pakistan where banking industry has completed two decades of transition from dominance of state-owned banks to a system where foreign and private banks compete freely with state-owned banks. We employ the stochastic frontier and inefficiency effects model on panel data from 1991 to 2005 and control for inter-bank heterogeneity in bank cost structures. We find that private banks demonstrate highest level of cost efficiency, followed by foreign, and then state-owned banks. Privatized and restructured banks suffer from efficiency losses in years following privatization/restructuring, but improve performance once they adjust. Although small and weak banks are selected for M&A, but following ownership change they increase technical efficiency. If present trends continue the reformed banks are likely to hold on to efficiency gains in the near future. The winners from the reforms are privatized banks and private banks selected for M&A who exploit new profit making opportunities.
Keyword Bank governance
Bank restructuring
Privatization
Cost efficiency
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Non-UQ

Document type: Journal Article
Sub-type: Article (original research)
Collection: School of Human Movement and Nutrition Sciences Publications
 
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Created: Wed, 07 May 2014, 14:24:42 EST by Michelle Rowland on behalf of School of Human Movement and Nutrition Sciences