Universal Journal of Industrial and Business Management(CEASE PUBLICATION) Vol. 2(3), pp. 80 - 91
DOI: 10.13189/ujibm.2014.020304
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Cost Efficiency of Italian Commercial Banks:A Stochastic Frontier Analysis

Alessio Fontani ¹, Luca Vitali ^2,*
1 CR Firenze and Luiss – Guido Carli Via Bufalini, 6 - 50122 Firenze
² University of Rome Tor Vergata Via Bernardino Alimena, 5 - 00173 Roma

ABSTRACT

During 90’s, the Italian banking system faced a new competitive environment both widening the dimensional scale and pursuing a rationalization process. Some insights could be drawn through efficiency analysis by estimation of a stochastic cost frontier for the period 1993-2004. Benchmark analysis not only highlights the contribution of the main factors that affect efficiency, but also allows evaluation of efficiency dynamics through time, determining the existence of technical progress and scale economies. However, such measure is significant if the sample of firms is homogeneous hence, accounting for heterogeneity of the units involved is then a goal of our analysis.

KEYWORDS
Italian Banks, Stochastic Frontier, Cost Function, Technical Progress, Heterogeneity

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Alessio Fontani , Luca Vitali , "Cost Efficiency of Italian Commercial Banks:A Stochastic Frontier Analysis," Universal Journal of Industrial and Business Management(CEASE PUBLICATION), Vol. 2, No. 3, pp. 80 - 91, 2014. DOI: 10.13189/ujibm.2014.020304.

(b). APA Format:
Alessio Fontani , Luca Vitali (2014). Cost Efficiency of Italian Commercial Banks:A Stochastic Frontier Analysis. Universal Journal of Industrial and Business Management(CEASE PUBLICATION), 2(3), 80 - 91. DOI: 10.13189/ujibm.2014.020304.