Bank efficiency determinant: Evidence from the gulf cooperation council countries

Al-Gasaymeh, A (2016) Bank efficiency determinant: Evidence from the gulf cooperation council countries. Research in International Business and Finance, 38. pp. 214-223. ISSN 02755319

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Abstract

Using data from 2003 to 2010, we examine the impact of economic freedom and country risks on the bank costs of potential Gulf Cooperation Council (GCC) union. In estimating a common frontier, this article employs Stochastic Frontier Approach (SFA) to control for country-specific variables, that is, economic freedom, country risk, macroeconomic conditions, bank accessibility and bank structure, for an unbalanced panel of 90 Jordanian and the GCC countries’ banks. This article further estimates bank efficiency levels in the potential GCC union member countries to shed some light on the capability and capacity of the banks to compete and survive within the future GCC union. We find that economic freedom helps in reducing potential bank costs. Enhancing economic freedom is crucial for the region to attract more investments and create a viable banking system. In order for the GCC members to have a successful union and achieve the objectives faster, it is important to have a similar level of economic performance, in particular in the banking sector.

Affiliation: Skyline University College
SUC Author(s): Al-Gasaymeh, A
All Author(s): Al-Gasaymeh, A
Item Type: Article
Uncontrolled Keywords: Economic freedom, country risk, SFA, Jordan, GCC
Subjects: A Business and Management > AH Finance
Divisions: Skyline University College > School of Business
Depositing User: Mr SUC Library
Date Deposited: 07 Jun 2022 16:47
Last Modified: 07 Jun 2022 16:47
URI: https://research.skylineuniversity.ac.ae/id/eprint/364
Publisher URL: https://doi.org/10.1016/j.ribaf.2016.04.018
Publisher OA policy: https://v2.sherpa.ac.uk/id/publication/9168
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