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Cost Efficiency and Product Mix Clusters across the Spanish Banking Industry

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Abstract

The competitive conditions under which Spanish bankingfirms operate have become much tighter. In these circumstances,inefficiencies should disappear, and if this does not occur,appropriate explanations should be explored. This paper doesexactly that, by estimating cost efficiency scores and assessingwhether they are biased by productive specialization. Thesequestions are not new, unlike the technique employed, whichenables us to evaluate firms' efficiencies by comparing them onlywith those focusing on similar specializations, without the needto specify separate frontiers for different output mixes. Resultsshow that firms' efficiency scores might be downward or upwardbiased when compared with all other firms in the industry, insteadof only with those focusing on similar activities.

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Authors and Affiliations

  1. Departament d'Economia, Universitat Jaume I, Campus del Riu Sec, 12071, Castelló de la Plana, Spain

    Emili Tortosa-Ausina

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  1. Emili Tortosa-Ausina
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Tortosa-Ausina, E. Cost Efficiency and Product Mix Clusters across the Spanish Banking Industry. Review of Industrial Organization 20, 163–181 (2002). https://doi.org/10.1023/A:1013836604679

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