An Empirical Study of Relationship between Agency Cost and Efficiency of the Banking Industry

• Main Authors: Yea-Yun Chiou, 邱雅雲
• Other Authors: Andy Chien
• Format: Others
• Language: zh-TW
• Published: 1999
• Online Access: http://ndltd.ncl.edu.tw/handle/87993955050705290319

碩士 === 國立高雄第一科技大學 === 金融營運系碩士班 === 87 === The ratio of banking own capital being lower than the other industry, but the relationship between depositors and banks is not like the association amid creditors and debtors in the other industry, for the creditors could bond behavior of debtors with restrictive covenants to protect their claims more easily. So, it is most important for depositors to concern with the agency cost from conflicts with banks, and negative influence upon managerial efficiency, especially when the banking crisis coming out. The methodology used in this study is particularly designed to include capital structure, compensation structure and monitoring strength of the outsider in the banking cost function from the angle of agency theory. Furthermore, we try to estimate the agency cost and determine the relative efficiency levels of banks. In addition, we are able to measure the effect of the economies of scale and the effect of the economies of scope from the relationship between banks’ output and cost. The samples included in the study are 34 banks and study period covered from 1995 to 1997 .The main findings of the study can be summarized as follows: First, capital structure of banks has a statistically positive significant effect on cost of banks. Second, both compensation structure and monitoring strength of outsider have no significant negative relationship with cost of banks. Finally, banks have economies of scale, but they have insignificant scope economies.