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The club convergence of efficiency in ASEAN banking sector


Citation

Awang Marikan, Dayang Affizah and Abdul Rahim, Rossazana and Habibullah, Muzafar Shah and Rahman, Md. Mahbubur (2018) The club convergence of efficiency in ASEAN banking sector. International Journal of Economics and Management, 12 (1). pp. 1-31. ISSN 1823-836X; ESSN: 2600-9390

Abstract / Synopsis

The study examines the internal financial structure of ASEAN banking and its efficiency. In doing so, it concentrates on the characteristics of banking sector efficiency and practises within the ASEAN countries banking sectors by using Phillips and Sul (2007a, 2007b and 2007c) approach. Firstly, by applying non-parametric Data Envelopment Analysis (Simar and Wilson, 2007) technique, it considers the technical efficiency of ASEAN banks. The outcome confirms that, at the aggregate level, the ASEAN banking markets are diverging. Further investigation indicates comparatively weak convergence between banking sector of ASEAN though there is still potential of catching up process between them. It can be concluded that ASEAN countries are inter-related and most of the banks are catching up within the different club and different degree of convergence. In terms of efficiency, the results show that at aggregate level, the ASEAN countries are competitive among each other acknowledged by the identification of 3 convergence clubs. The study is able to gain an insight overview regarding ASEAN banking efficiency and its ability to catch up between member countries. These could lead to a successful financial integration, fullfiling the objective to create a potential single currency within ASEAN countries in the near future.


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Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
Publisher: Faculty of Economics and Management, Universiti Putra Malaysia
Keywords: Banking sector efficiency; Non-linear model; ASEAN; Convergence
Depositing User: Nabilah Mustapa
Date Deposited: 05 Oct 2018 15:30
Last Modified: 05 Oct 2018 15:30
URI: http://psasir.upm.edu.my/id/eprint/65311
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