Baten, Md Azizul and Mat Kasim, Maznah and Rahman, M. (2015) Cost and profit efficiency of online banks: Do national commercial banks perform better than private banks? Journal of Internet Banking and Commerce, 20 (3). pp. 1-19. ISSN 1204-5357

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Abstract

This study employs the parametric approach, in particular the Stochastic Frontier Approach, to examine the cost and profit efficiency of National Commercial Banks and Private Banks in Bangladesh using stochastic frontier model.The cost inefficiency and profit efficiency are observed slightly higher for private banks than national commercial banks. The coefficient of advance (0.334) is highly significant at 1% level and the coefficient of off-balance sheet items (0.339) is significant at 5% level.Both results are positive influence to the banks for cost model.The coefficients of Advance, Other earning assets, Off-balance sheet items, Price of fixed assets and Price of labour are recorded highly significant in profit model.The average cost inefficiency and profit efficiency are observed 16.3% and 91% respectively.The lowest cost inefficiency is 5.3% for United Commercial Bank Limited while the highest cost inefficiency is 44.7% for Janata Bank. The lowest profit efficiency is 76.9% for Janata Bank while the highest profit efficiency is 94.9% for Eastern Bank Limited.

Item Type:	Article
Uncontrolled Keywords:	Cost efficiency; Profit efficiency;Translog stochastic cost and profit model; National Commercial Banks and Private Banks; Bangladesh
Subjects:	H Social Sciences > HG Finance
Divisions:	School of Quantitative Sciences
Depositing User:	Prof. Madya Dr. Md. Azizul Baten
Date Deposited:	27 Sep 2016 06:32
Last Modified:	27 Sep 2016 06:32
URI:	https://repo.uum.edu.my/id/eprint/18673

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