Essay about Capital Structure of Sme Sector in Bangladesh

14177 Words Nov 8th, 2014 57 Pages
The Cost-Efficiency of French Banks∗
Estelle Brack†and Ramona Jimborean‡ First Draft: September 2008 This Version: April 2009

The paper addresses the issue of French banks efficiency, compared to their homologous from Europe and the United States. The analysis is realized on a sample formed by the ten biggest banks from France, Germany, Italy, Spain, the United Kingdom and the United States, over the period 1994-2006. The Data Envelopment Analysis (DEA) method is employed. The results show an improvement in cost-efficiency of French and Spanish banks, while in the other countries a decline in cost-efficiency is noted. We proceed to several tests of convergence, showing that inefficient banks have reduced the gap during the period
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Interesting perspectives can be obtained through analyzes carried out on banking systems of several countries1 . The existence of differences in banks behavior in the European economies is a key factor that might explain the velocity of convergence in the European banking system or the probability of future cross-border mergers and acquisitions. The European banking system encountered important changes since 90s. The Second Banking Directive (1989)2 established the single banking license: any bank authorized to provide banking services in a EU state is allowed to provide banking services in any EU state (commonly called the European passport). By reducing legal barriers to entry on foreign banking markets, this directive was expected to favor the cross-border expansion of banking services, through either the creation of branches or the supply of cross-border financial services. Another step towards an integrated European banking market consists of the single currency creation, in 1999. This has reduced the exchange risk for banks in the cross-border acquisitions and in the supply of cross-border services. Meanwhile, several legal obstacles continue to exist in the process of banking markets integration. The Financial Services Action Plan (FSAP, 1999-2004) was launched in 1999, having three main objectives: i) the creation of a single EU wholesale market for financial services and products; ii) the creation of an open and secure

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