Is full efficiency achievable? An empirical study of the banking industry in Taiwan

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Chen, Ku Hsieh
Cheng, Jen-Chi
Lee, Joe Ming
Chi, Ching Fang

Chen, K. , Cheng, J. , Lee, J. and Chi, C. (2019), IS FULL EFFICIENCY ACHIEVABLE? AN EMPIRICAL STUDY OF THE BANKING INDUSTRY IN TAIWAN. Contemp Econ Policy, 37: 195-209


This paper aims to propose a feasible framework for estimating the efficiency of input factors for banks and the adjustment of these factors necessary to achieve full efficiency in the short and long term. Based on a sample of 39 Taiwanese banks during 1999–2011, the framework recommends a scheme along with a set of adjustments empirically that allow the banks to not only achieve full efficiency but also save 10.3% of the total costs in the short term and 8.8% in the long term. This scheme amounts to short-term and long-term savings of NT$3.6 billion and NT$3.1 billion, respectively. (JEL C23, D24, G21).

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