The technical efficiency of the Japanese banks: Non-radial directional performance measurement with undesirable output

Carlos Pestana Barros, Shunsuke Managi, Roman Matousek

Research output: Contribution to journalArticlepeer-review

208 Citations (Scopus)

Abstract

The paper analyses technical efficiency of the Japanese banks from 2000 to 2007. The estimation technique is based on the Russell directional distance function that takes into consideration not only desirable outputs but also an undesirable output that is represented by non-performing loans (NPLs). The results indicate that NPLs remain a significant burden as for banks' performance. We show that banks' inputs have to be utilised more efficiently, particularly labour and premises. We also argue that a further restructuring process is needed in the segment of Regional Banks. We conclude that the Japanese banking system is still far away from being fully consolidated and restructured.

Original languageEnglish
Pages (from-to)1-8
Number of pages8
JournalOmega
Volume40
Issue number1
DOIs
Publication statusPublished - Jan 2012
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research
  • Information Systems and Management

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