Managerial Efficiency and Bank Profitability

Authors

  • Md. Asif Nawaz University of Dhaka Author
  • Md Jahir Uddin Palas University of Dhaka Author
  • Tasneema Khan University of Dhaka Author

DOI:

https://doi.org/10.54728/JFMG.202409.00085

Keywords:

Managerial efficiency , Bank profitability

Abstract

We study the relationship between managerial efficiency and bank profitability in the context of the U.S. banking sector. We utilize Stochastic Frontier Analysis based on a dataset of 4081 U.S. banks, spanning from 2009 to 2021. Two key findings emerge: firstly, geographical disparities exist in operating cost efficiency, with banks in more developed states demonstrating higher efficiency compared to those in less developed regions. Secondly, we document a significant positive relationship between managerial efficiency and profitability. Our findings are robust to alternative definitions of key variables and additional model specifications. The implications of these findings extend to policymakers, who should prioritize tailored interventions to enhance bank efficiency while considering geographical specificities.

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Published

2024-12-23

How to Cite

Nawaz, M. A. ., Palas, M. J. U., & Khan, T. . (2024). Managerial Efficiency and Bank Profitability. Journal of Financial Markets and Governance, 3(2), 47-71. https://doi.org/10.54728/JFMG.202409.00085