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The study aims to analyze the changes in banking market structure and their impact on the bank efficiency.

This study uses a one-stage stochastic frontier analysis (SFA) to compare the impact of the market structure and the GFC on the economic efficiency of the major banks in both countries.

A significant negative impact of the GFC is observed on bank efficiency. Overall, Canadian banks posted better efficiency scores than their American counterparts. Additionally, cost-efficient banks are found to be more resilient to crises and more profit-efficient in the post-GFC period. The authors found that market power had a positive impact on the cost and profit efficiency of banks. Higher levels of equity, market power and concentration helped banks be more cost-efficient.

Only large banks are selected for study although it represents the majority stake of both banking sectors.

Banking regulators should include more measures to assess the banking market structure and performance.

As per the best knowledge of the authors, it is the first study to assess the change in banking market structure and efficiency of the US and Canadian banking sectors in the post-GFC period.

The paper attempts to analyze vertical product differentiation as a strategy pursued by European banks seeking greater market power and higher reputation for quality, and to examine whether this entails losses in banking efficiency.

First, the empirical analysis seeks to demonstrate whether borrowers at banks in Europe are willing to pay a premium to operate with banks that attempt to increase their reputation for quality in the market, i.e. whether banks use quality to vertically differentiate and so soften competition. To test such hypothesis requires us to define an empirical model with variables that describe certain characteristics of banking quality as explanatory variables of the loan interest to the market interest rate margin. This model is estimated by two stage least squares. Second, the paper seeks to test whether the market power derived from vertical product differentiation (quality reputation) prevents banks from operating efficiently. To test this hypothesis first we estimated cost efficiency taking into account bank risk preferences and then we define an empirical model that relates the results on efficiency with the margin of interest loan rate over the market interest rate.

The results show that less competition, deriving from a bank's ability to differentiate its services from those of its rivals through quality, is positive because it helps to provide a more stable banking system. Moreover, the banking market power generated by investing in quality does not prevent banks from operating efficiently from a production point of view.

The findings are consistent with the view that European banks soften competition by being more stable, and this does not prevent cost efficiency. So it seems that the regulatory authorities should improve their solvency measures since borrowers’ preferences are to maintain relationships with non‐fragile banks, and on the other hand banks’ risk preferences seem to be to look for sound borrowers.

Frontier cost efficiency scores that account for bank's risk preference are able to be related with customer preferences based on the model of the industrial organization (10) based on vertical product differentiation in banking.

This is the first paper that relates vertical product differentiation with the results obtained from the literature on x‐efficiency. It is also the first paper that studies the impact of banking market power jointly with cost efficiency in social efficiency when market power comes as result of investing in reputation for banking quality.

This paper aims to investigate the effects of cost, revenue and profit efficiency on bank profitability in an emerging economy such as India over the period 1997 to 2017. Additionally, this study examines the effect of efficiency on profitability across different ownership groups for a panel of 70 Indian commercial banks.

In the first stage, using stochastic frontier analysis, we estimate the efficiency scores of cost, revenue and profit over the examined period. In the second stage, this study uses the two-step system generalized-method of moments dynamic panel approach to investigate the impact of several efficiency measures on bank profitability.

Results estimated through and system generalized-method of moments indicate that a higher level of cost, revenue and efficiency significantly improves India's bank profitability. Regarding ownership groups, this study finds that the public sector banks are most cost-efficient compared to private and foreign banks. Other bank-specific, macroeconomic and institutional variables have played a significant role in determining bank profitability.

The findings of the study extend some important policy implications. In light of the rapid decline in bank profitability, banks should focus on increasing the efficiency of their operations. Improvement in profit, cost and revenue efficiency can ameliorate bank performance significantly. Profit efficiency that takes into account both cost and revenue efficiency should be maintained reasonably to prevent the declining pattern of bank profitability that the industry has witnessed over the years.

To the best of the author's knowledge, this study is a fresh piece of research that fulfils an urgent need of investigating the dynamics between bank efficiency and bank profitability in India. In an emerging economy like India, where the banking sector has witnessed substantial structural transformations over the past two decades, such study demands an immediate empirical investigation.

The main purpose of this paper is to examine the relationship between the market structure and financial performance of Malaysian commercial banks over the period of 2000 to 2011 by testing the structure-conduct-performance (SCP) and efficient-structure (ESH) hypotheses.

Data envelopment analysis (DEA) is employed to measure the efficiency of banks, while concentration ratio is used to assess the market structure of Malaysian banks. Next, utilizing the least squares method, both variables – market structure and efficiency of banks – among other explanatory variables (market share, operating expenses, loans ratio and size of banks) are regressed upon the dependent variable, namely financial performance of banks represented by return on asset (ROA), return on equity (ROE) and net interest margin (NIMTA).

The concentration of Malaysian banking industry is at a declining trend; structurally speaking, Malaysian banks are more competitive due to less market concentration. In terms of efficiency, the DEA results reveal that Malaysian banks are operating below their capacity at 40 per cent of efficiency. Thus, Malaysian banks could reduce their utilization of inputs by 60 per cent to operate on the efficient frontier. Next, the results offer support to ESH, which implies that market concentration and banking efficiency determines the profitability performance of Malaysian commercial banks.

Past studies on Malaysian banking sector had tended to focus either on measuring the performance or assessing the market structure of banks. Thus, this study attempts to fill the gap in the literature by testing the nexus between the market structure and the performance of banks.

This study investigates the interrelationships between efficiency, competition and risk in the Chinese banking industry.

Parametric stochastic frontier analysis is used to estimate bank efficiency; the Lerner index is used as the competition indicator; accounting ratios and a translog function are used to measure different types of risk and finally, the three-stage least square estimator is used to investigate the interrelationships.

The results of this study show that the impact of competition on different types of risk is significant and positive, while there is a significant and positive impact of credit risk, liquidity risk and capital risk on bank competition. In addition, the findings demonstrate that the interrelationships between efficiency and competition are significant and negative. The authors do not find any robust interrelationships between different types of risk and different types of efficiency; the authors find that diversification and higher levels of profitability reduce bank credit risk. The results suggest that a higher developed banking sector reduces the level of bank competition in China.

This is the first piece of research that comprehensively investigates the interrelationships between different types of risk, competition and different efficiencies in China.

The purpose of this paper is to critically examine the sources of inefficiency in the Korean banking sector. The present study focuses on three different approaches: intermediation approach, value‐added approach, and operating approach, to differentiate how efficiency scores vary with changes in inputs and outputs.

The paper utilizes the non‐parametric data envelopment analysis methodology to measure the efficiency of banks operating in the Korean banking sector. The method allows for the decomposition of technical efficiency (TE) into its mutually exhaustive components of pure technical and scale efficiencies.

The empirical findings suggest that estimates of TE are consistently higher under an operating approach vis‐à‐vis the intermediation and value‐added approaches. On the other hand, banks are characterized by a relatively low level of TE under the intermediation approach.

Further analysis on the performance of the Korean banking sector performance will examine the efficiency changes over time by employing the parametric stochastic frontier analysis method. Investigations into productivity changes over time, as a result of a technical change or technological progress or regression by employing the Malmquist productivity index could yet be another extension to the paper.

The findings from this study are essential not only for the managers of the banks, but for numerous stakeholders such as the central banks, bankers associations, governments, and other financial authorities. Knowledge of these factors would also be helpful to the regulatory authorities and bank managers who formulate going forward policies for improved efficiency of the Korean banking sector.

Unlike the previous studies on the efficiency of the Korean banking sector, the paper focuses on three different approaches: intermediation approach, value‐added approach, and operating approach to differentiate how efficiency scores vary with changes in inputs and outputs.

Based on a matched sample of 34 Islamic banks and 89 conventional ones, the purpose of this paper is to analyze and compare the risk-capital-efficiency interconnection.

Based on the triple square model (3SLS), two major risk measures have been accounted for, namely, the ratio of non-performing loans to total loans (credit risk) and the z-score indicator (risk insolvency). In addition, certain bank-specific factors as well as macroeconomic ones have also been considered in the model.

The reached results appear to reveal that the best capitalized Western banks turn out to be more engaged in an excessive risk-taking behavior, resulting in increased toxic-loan ratios and, simultaneously, a rather shaken stability. Concerning Islamic banks, cost efficiency has proven to have a negative and significant effect on NPLs. However, the capital, technical efficiency, competitiveness and macroeconomic factors turn out to have a significant and positive effect on Islamic banks’ insolvency risk, thus helping promote these banks’ stability.

In addition to the enrichment of literature regarding dual-banking systems, the authors hope the present work would provide a modest contribution to the regulators belonging to the MENA region and Asia with useful results. In particular, the authors recommend developing some management and monitoring tools whereby the risk-taking behavior of highly capitalized conventional banks could be moderated. As a matter of fact, special attention should be paid to the agency problems prevalent within Islamic financial institutions, particularly the best capitalized ones.

The purpose of this paper is to examine the efficiency of the banking sector in Qatar. The paper utilizes 15 banks comprising Islamic, conventional and foreign banks for the duration of 2007 to 2011.

Data envelopment analysis (DEA) technique is applied to compute technical efficiency, pure technical efficiency and scale efficiency. Also, Malmquist productivity index (MPI) is used to identify the sources of productive efficiencies of the banks.

The results suggest that Qatari banks are operating below optimum performance and thus there is still room for improvement. While conventional banks are the most efficient in Qatar in terms of technical and pure technical efficiencies, Islamic banks are most efficient in terms of scale efficiency. Besides, pure technical inefficiency dominated scale inefficiency in the Qatari banking sector. Moreover, as compared to the Islamic banks, conventional and foreign banks recorded a reduction in average technical efficiency during the duration of the 2008/2009 global financial crisis. In terms of productivity progress, all the Qatari banks were experiencing a decline in productivity mainly attributed to less technological innovation in the banking sector of Qatar.

Most of the banks in Qatar do not have published data before 2007 and after 2011.

There is less technological innovation in the banking sector of Qatar. Hence, bank managers in Qatar should focus on educating customers about modern banking technologies and other innovative banking services in Qatar.

This study is a pioneering effort in the application of DEA and MPI to study about the banking sector in Qatar.

Hong Kong and Singapore are economically similar and rival international financial centers. Banks in both Hong Kong and Singapore operate in very similar environments: internationally oriented with protected domestic banking market and firm regulators. With liberalization under the Financial Services Accord of the World Trade Organization (WTO), comes more competition and the growing importance for banks to ensure that they are X‐efficient so as to compete successfully or risk being marginalized. This paper uses data envelopment analysis (DEA) to assess X‐efficiency of banks in Hong Kong and Singapore via a two‐stage (combining both the intermediation and production stages) banking model. Changes in X‐efficiency over time are computed to determine if policy initiatives have facilitated improvements in efficiency. Our results on X‐efficiency of banks demarcated by size and ownership provide valuable insights into the issues of scale economies and the impact of family ownership on X‐efficiency.

The purpose of this paper is to examine the banking industry’s efficiency using the case of Yemen.

The paper utilises two-stage analysis to evaluate the efficiency adopting Data Envelopment Window Analysis (DEWA) in the first stage for the period 1996-2011. Furthermore, the paper addresses, in two-dimensional matrix, the stability and efficiency of the banking sector in order to assess their ability for survival. In the second stage, panel data analysis is applied to regress a set of bank-specific and macro-economic variables on the efficiency of the banking sector in Yemen in a comparative fashion between Islamic and conventional banks.

The findings of the investigation indicate that the Yemeni banking industry in general was on a declining efficiency’s trend with increased instability during the later period of the investigation. In addition, the study shows that most conventional banks were relatively stable, though inefficient, while Islamic banks were more efficient over the time. The results of panel data regression further suggest that efficiency is related to a number of determinants. Loan/financing, and profitability are the common key determinants of efficiency for both Islamic and conventional banks. However, other determinants have impacted differently for Islamic and conventional banks, which could reflect the uniqueness of their operation and structure.

The present study provides a basis for the regulators and bankers to assess the viability of the banking sector and proposes policies to restructure the industry in order to enhance the performance of the whole industry.

The paper presents new empirical findings on the efficiency of Islamic and conventional banks in Yemen.