This paper uses the stochastic econometric cost frontier approach to investigate the cost efficiency of commercial banks in Hong Kong. On average, the X-efficiency of Hong Kong banks is found to be about 16 to 30 percent of observed total costs, which is comparable to the findings in the U.S....

Presentation to the Conference on Asian Banking and Finance at the Federal Reserve Bank of San Francisco, San Francisco, CA, June 11, 2012

Presentation to the Conference on Asian Banking and Finance at the Federal Reserve Bank of San Francisco, San Francisco, CA, June 11, 2012

The degree to which bankruptcy is permitted to play a role in the allocation of capital is a key distinction between the Asian state-directed financial regime and the Western market-directed version. The paper discusses the two approaches to finance and argues that a major problem with the bank...