Determinants of efficiency in state-chartered financial institutions: Why financial education and freedom matter

In this paper, we verify which qualitative banking attributes can determine the level of American state-chartered Financial Institutions (FIs) and evaluate its underlying variables. The methodology followed three procedures of analysis. First, we measured banking efficiency using a two-stage SBM net...

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Bibliographic Details
Main Authors: Emmanuel Sousa de Abreu, Herbert Kimura
Format: Article
Language:English
Published: Elsevier 2020-12-01
Series:Heliyon
Subjects:
Online Access:http://www.sciencedirect.com/science/article/pii/S2405844020326384
Description
Summary:In this paper, we verify which qualitative banking attributes can determine the level of American state-chartered Financial Institutions (FIs) and evaluate its underlying variables. The methodology followed three procedures of analysis. First, we measured banking efficiency using a two-stage SBM network data envelopment analysis (NDEA). Subsequently, we used machine learning methods to predict efficient FIs from qualitative attributes. Finally, we tested the variables related to the attributes, using a fractionated logistic regression controlled by economic-financial variables. As main results, we found that attributes linked to political-administrative localization criteria were the more important attribute in predicting if the FI was in the efficient group; we confirmed the recent findings of the literature that state that less governmental influence (freedom) is related to more efficient institutions. Besides that, we found that a population with a higher financial education have FIs with higher levels of efficiency.
ISSN:2405-8440