Volume 20, Number 1, June 2025
| Are Cooperative Financial Institutions Less Efficient? -- A Case Study of Japan |
Abstract
This study examines the efficiency of Japanese commercial banks and cooperative financial institutions employing stochastic frontier analysis (SFA) and stochastic metafrontier (SMF) approaches. Employing the Battese and Coelli (1995) model and the Huang et al. (2014) metafrontier method, we analyze the impact of bank characteristics on efficiency and compare performance between the two institutional types before and after the global financial crisis. Results indicate that while most factors influence both institutions similarly, their response to capital adequacy ratios differ. Furthermore, cooperative institutions demonstrated superior cost efficiency post-crisis, highlighting their stabilizing role in the Japanese financial system.
Keywords: Cooperative Financial Institutions, Banking Efficiency, Stochastic Frontier Approach, Stochastic Metafrontier
JEL Classification: G21, G13