Efficiency is considered a key factor when evaluating a bank's performance. Moreover, efficiency enhancement is an … explicit policy objective in the Single Market Directive of the European Commission. But efficiency improvements may come at … the expense of deteriorating bank profits and excessive risk-taking. Both the quantitative effects and dynamic reactions …

We analyze the stability of efficiency rankings of German universal banks between 1993 and 2004. First, we estimate … traditional efficiency scores with stochastic cost and alternative profit frontier analysis. Then, we explicitly allow for … different risk preferences and measure efficiency with a structural model based on utility maximization. Using the almost ideal …

health. Neglecting these differences confuses inefficiency with heterogeneity while sub-sample estimation prohibits … efficiency comparisons across different samples. We use a latent class stochastic frontier model to estimate simultaneously … multiple technology regimes and group membership probabilities. The latter are conditioned on six bank traits of German banks …

directions since then: Italy privatized its publicly-owned banks while Germany has maintained a large share of state … activities have affected banks' productivity in the period 1994-2004, differentiating between technical change, efficiency change …