Samisoni Maea

Citation

Thesis Title
The efficiency of the commercial banks in six Pacific Island countries

Read article at Massey Research Online:

The primary objective for this thesis is the measurement of commercial banks efficiency in six Pacific Island Countries. The small number of banks in this dataset enables a structural investigation to explain the fundamental sources of bank efficiency. A key feature of this thesis is to promote a sense of appreciating the uniqueness of banking operation in the region and the complexity of the banking industry. Practical relevance is ensured by focussing on the impact of banking supervisors’ prudential requirements in bank efficiency and the performance of bank management. Resulting efficiency scores and ratings are strengthened by the employment of a series of practical and innovative measures to explain the sources of bank efficiency variation. In addition, another series of comprehensive validating procedures are employed to reaffirm resulting efficiency scores. The key research finding is the identification of liquidity requirements as the main source of bank inefficiency. Capital requirements are not only ineffective in promoting bank efficiency but in the absence of formal liquidity requirements, they become a contributing factor for causing asset deterioration. Asset quality is inversely related to bank efficiency. Scale inefficiency is unusually large compared with reported scale inefficiency in the literature and in most countries, it dominates technical inefficiency.

Supervisors
Professor David Tripe
Dr Manuhuia Barcham