Abstract
The aim of this study is to present some measures of the performance of banks operating in Australia since the deregulation of the Australian financial system in early 1980s; including the periods of financial market instability (the early 1990s and mid to late 2000s). In undertaking this measurement two approaches will be used. The first simply applies standard financial indicators. The second approach applies data envelopment analysis (DEA), to determine Malmquist indices of the levels of and the changes in the efficiency and productivity of Australian banks. The empirical results demonstrate the effect of deregulation and periodic financial crisis’s on the performance of individual banks, and the major part of the Australian banking sector. Overall the productivity performance of the Australian banks tended to improve considerably in those periods of strongest economic growth (i.e. the mid 1980s and 2000s).
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Notes
Under the four pillar policy, bank mergers have been allowed except mergers of the four major banks with each other or with the two largest insurance companies.
See for instance KPMG (2010)
For a review of frontier efficiency measurements of mutual-financial institutions (including the use of DEA) see Worthington (2010).
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Abbott, M., Wu, S. & Wang, W.C. The productivity and performance of Australia’s major banks since deregulation. J Econ Finan 37, 122–135 (2013). https://doi.org/10.1007/s12197-011-9172-0
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DOI: https://doi.org/10.1007/s12197-011-9172-0