International Conference on Eurasian Economies

10-12 July 2017 – Istanbul, TURKEY

Paper detail

Paper ID : 1907
Status : Paper published
Language : Turkish
Topic : Regional Economics
Presenter: Asst. Prof. Dr. Dastan Aseinov
Session : 1D Bölgesel Çalışmalar

Factors Affecting Cost Efficiency in the Banking Sector of Kyrgyzstan
Kırgızistan Bankacılık Sektöründe Maliyet Etkinliğini Etkileyen Faktörler

• Asst. Prof. Dr. Dastan Aseinov (Kyrgyz-Turkish Manas University, Kyrgyzstan)

Abstract

Instabilities in the banking sector have had an adverse effect on the economy as a whole, since the largest share in the financial system and financial intermediation in Kyrgyzstan have been captured by banking sector. Economic efficiency in banking can be viewed as a source of financial stability of banking system. Economic efficiency of the banking is more important challenge not only for shareholders and managers of banks, and also for regulation and supervision authorities, and public and potential investors. The aim of this study is to examine factors affecting the banking cost efficiency for Kyrgyz banks. It is also important to choose the appropriate approach in measurement of banking cost efficiency, since there are many different methods. In this study preferred stochastic frontier approach which assumes random error term which captures sampling, measurement and specification errors. We adopted stochastic cost frontier model proposed by Battese ve Coelli (1995) which also allow to examine investigate the impact of variables on efficiency. We used unbalanced panel data set captured 17-23 Kyrgyz commercial banks for period of 2000-2013. Obtained results suggest that capitalization, foreign ownership, credit risk, liquidity risk and currency risk have most influence on cost efficiency scores of banks calculated averagely at level of 0,766. Overall results indicate that domestic banks more cost efficient than domestic private and foreign banks. Average cost efficiency scores of domestic banks, foreign and separately public banks are 0,848; 0,649 and 0,875, respectively.

JEL codes: G21, D24, P34

Aseinov, Dastan (2017). "Factors Affecting Cost Efficiency in the Banking Sector of Kyrgyzstan" in Proceedings of International Conference of Eurasian Economies 2017, pp.484-492, Istanbul, TURKEY.

DOI: https://doi.org/10.36880/C08.01907

Full paper in PDF format.

Session 1D: Bölgesel Çalışmalar