Banking risk and efficiency: an evidence from commercial banks of Pakistan

Ahmad, Shabbir (2006). Banking risk and efficiency: an evidence from commercial banks of Pakistan. In: Proceedings of 6th Global Conference on Business and Economics. GCBE 2006: 6th Global Conference on Business & Economics, Boston, MA, USA, (1-15). 15-17 October, 2006.

Author Ahmad, Shabbir
Title of paper Banking risk and efficiency: an evidence from commercial banks of Pakistan
Conference name GCBE 2006: 6th Global Conference on Business & Economics
Conference location Boston, MA, USA
Conference dates 15-17 October, 2006
Proceedings title Proceedings of 6th Global Conference on Business and Economics
Place of Publication Jama Masjid, Delhi, India
Publisher Association for Business and Economics Research (ABER)
Publication Year 2006
Sub-type Fully published paper
Open Access Status
ISBN 097421146X
9780974211466
Start page 1
End page 15
Total pages 15
Language eng
Formatted Abstract/Summary
The paper examines the impact of risk and quality factors on banks cost structure. Using the stochastic cost frontier the technical efficiency and technical change is estimated for all commercial banks of Pakistan during 1991-2002. Results show that inclusion of risk and quality variables into cost function improve the efficiency of banks. However, efficiency of publicly owned banks remains insensitive to these factors. Moreover, results indicate that technical change reduces the cost of intermediation of all banks, by 1 percent on average, during the study period. We also find that both non-performing loans and other risk factors put a downward pressure on banking efficiency suggesting that diversification of loan portfolio to different sectors.
Keyword Banking risk
Non-performing loans
Efficiency
Technical change
Q-Index Code EX
Q-Index Status Provisional Code
Institutional Status Non-UQ

 
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Created: Wed, 07 May 2014, 14:50:18 EST by Michelle Rowland on behalf of School of Human Movement and Nutrition Sciences