May 1997

Efficiency of Financial Institutions: International Survey and Directions for Future Research

Allen N. Berger and David B. Humphrey


This paper surveys 130 studies that apply frontier efficiency analysis to financial institutions in 21 countries. The primary goals are to summarize and critically review empirical estimates of financial institution efficiency and to attempt to arrive at a consensus view. We find that the various efficiency methods do not necessarily yield consistent results, and we suggest some ways that these methods might be improved to bring about findings that are more consistent, accurate, and useful. Secondary goals are to address the implications of efficiency results for financial institutions in the areas of government policy, research, and managerial performance. Areas needing additional research are also outlined.

Keywords: Bank, merger, efficiency, profit, cost

PDF: Full Paper

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