Risk-adjusted efficiency and innovation: an examination of systematic difference and convergence among BRIC banks
Nguyen, Thanh, Nghiem, Son, and Bhati, Abhishek Singh (2023) Risk-adjusted efficiency and innovation: an examination of systematic difference and convergence among BRIC banks. Economic Systems. 101167. (In Press)
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Abstract
We argue that technological progress and technology diffusion is improving innovation the banking industry, leading to a potential steady-state equilibrium in operational efficiency and innovation across banks with similar characteristics. Using the latest meta-frontier method, this study examined BRIC banks during the period from 2000 to 2020. We found that Indian and Brazilian banks are more innovative in reducing costs, whereas Indian and Chinese banks are more cost efficient. Chinese, Russian, Indian, and Brazilian banks rank first to fourth in profit efficiency and profit-making innovation, respectively. Risk-taking boosts group cost and profit efficiencies and profit-making innovation but reduces cost-reducing innovation in each country. BRIC banks diverged in innovation during the analysis period but slowly converged after the 2008 crisis. Reform policies, adoption of production technology, formulating regulations and investing in human capital and technologies are crucial for less efficient and innovative banks to catch-up with frontier banks.
| Item ID: | 81485 |
|---|---|
| Item Type: | Article (Research - C1) |
| ISSN: | 1878-5433 |
| Copyright Information: | © 2023 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/). |
| Date Deposited: | 01 Jan 2024 22:15 |
| FoR Codes: | 35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3502 Banking, finance and investment > 350208 Investment and risk management @ 30% 35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3502 Banking, finance and investment > 350299 Banking, finance and investment not elsewhere classified @ 20% 38 ECONOMICS > 3801 Applied economics > 380107 Financial economics @ 50% |
| SEO Codes: | 11 COMMERCIAL SERVICES AND TOURISM > 1102 Financial services > 110201 Finance services @ 80% 15 ECONOMIC FRAMEWORK > 1502 Macroeconomics > 150299 Macroeconomics not elsewhere classified @ 20% |
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