The Impact of Information Concentrating System for the Technical Efficiency of Taiwan Bank-Based FHCs

• Main Authors: You-Ron Jhang, 張祐榕
• Other Authors: Ming-Chieh Wang
• Format: Others
• Language: en_US
• Published: 2005
• Online Access: http://ndltd.ncl.edu.tw/handle/09847728389994082676

碩士 === 國立暨南國際大學 === 國際企業學系 === 94 === Our purposes in this paper are to examine empirically 3 questions which are suggested. First, after introducing ICS, has the cost productivity of the Taiwan banking industry improved or worsened? Second, during the same time period, has the profit productivity of the Taiwan banking industry improved or worsened? Finally, take foreign banks to compare with our findings. We specify a translog total cost (and alternative profit) equation in order to estimate the respective stochastic frontiers. The results suggest that bank-based FHCs’ banks in Taiwan increased their cost to improve service quality that was reflected in greater profits. The most likely explanation is that there is a cost and profit trade-off by technical advance. Our findings confirm the research of US banking between 1991 and 1997 of Berger and Mester (2002) and Molyneux (2003) that examines European banks between 1992 and 2000. In general, the results indicate that technical change can have a differential effect on bank costs and profits. In our further analysis of domestic (Chinatrust and Taishin) and foreign banks (Bank of America, Citibank and Bank of Tokyo Mitsubishi), it seems that foreign banks with ICS benefited more from technical change both on the cost and profit perspectives. The technology of US and Japan’s core-banking systems have led Taiwan for many years and the efficiencies have had emerged both on cost and profit sides.