Relationship among cost of financial intermediation, risk, and efficiency: Empirical evidence from Bangladeshi commercial banks
The global financial crisis and stiff market competition enhance risk exposures that raise debate on the cost of financial intermediation and the supremacy of banks’ efficiency. This study examines the concurrent effects of bank risk, efficiency and cost of financial intermediation of Bangladeshi co...
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Online Access: | http://dx.doi.org/10.1080/23322039.2021.1967575 |
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doaj-82fab83a7aa04563831275d1eb74980a2021-08-24T15:34:25ZengTaylor & Francis GroupCogent Economics & Finance2332-20392021-01-019110.1080/23322039.2021.19675751967575Relationship among cost of financial intermediation, risk, and efficiency: Empirical evidence from Bangladeshi commercial banksAnupam Das Gupta0Niluthpaul Sarker1Mohammad Rifat Rahman2University Of ChittagongJagannath UniversityUniversity Of ChittagongThe global financial crisis and stiff market competition enhance risk exposures that raise debate on the cost of financial intermediation and the supremacy of banks’ efficiency. This study examines the concurrent effects of bank risk, efficiency and cost of financial intermediation of Bangladeshi commercial banks. The Two-Step System GMM (2GMM) estimators of unbalanced dynamic panel data of 32 commercial banks from 2000 to 2016 addresses key factors rigorously in the light of bank-level, industry-level, and macroeconomic-level phenomenon. Efficiency gains cost the spread of banks’ financial intermediation, and risk-taking negatively affects the return. Cost-efficient banks are taking more credit risk; however, more efficiency gains reduce banks’ risk substantially. Size (cost of intermediation) of banks positively (inversely) affect the risk-taking (efficiency) behaviour of banks. Market competition enhances the risk and efficiency and reduces banks’ interest spread. Finally, the Nonlinear effect of size and market competition is heterogeneous on risk, efficiency, and financial intermediation cost that follows a U-shape curve. This study explicitly addresses two issues: simultaneous effect of financial intermediation, bank risk, and efficiency and validated the nonlinear relationship considering size and market competition effect.http://dx.doi.org/10.1080/23322039.2021.1967575cost of financial intermediationriskefficiencygmm estimatorsmarket competition |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Anupam Das Gupta Niluthpaul Sarker Mohammad Rifat Rahman |
spellingShingle |
Anupam Das Gupta Niluthpaul Sarker Mohammad Rifat Rahman Relationship among cost of financial intermediation, risk, and efficiency: Empirical evidence from Bangladeshi commercial banks Cogent Economics & Finance cost of financial intermediation risk efficiency gmm estimators market competition |
author_facet |
Anupam Das Gupta Niluthpaul Sarker Mohammad Rifat Rahman |
author_sort |
Anupam Das Gupta |
title |
Relationship among cost of financial intermediation, risk, and efficiency: Empirical evidence from Bangladeshi commercial banks |
title_short |
Relationship among cost of financial intermediation, risk, and efficiency: Empirical evidence from Bangladeshi commercial banks |
title_full |
Relationship among cost of financial intermediation, risk, and efficiency: Empirical evidence from Bangladeshi commercial banks |
title_fullStr |
Relationship among cost of financial intermediation, risk, and efficiency: Empirical evidence from Bangladeshi commercial banks |
title_full_unstemmed |
Relationship among cost of financial intermediation, risk, and efficiency: Empirical evidence from Bangladeshi commercial banks |
title_sort |
relationship among cost of financial intermediation, risk, and efficiency: empirical evidence from bangladeshi commercial banks |
publisher |
Taylor & Francis Group |
series |
Cogent Economics & Finance |
issn |
2332-2039 |
publishDate |
2021-01-01 |
description |
The global financial crisis and stiff market competition enhance risk exposures that raise debate on the cost of financial intermediation and the supremacy of banks’ efficiency. This study examines the concurrent effects of bank risk, efficiency and cost of financial intermediation of Bangladeshi commercial banks. The Two-Step System GMM (2GMM) estimators of unbalanced dynamic panel data of 32 commercial banks from 2000 to 2016 addresses key factors rigorously in the light of bank-level, industry-level, and macroeconomic-level phenomenon. Efficiency gains cost the spread of banks’ financial intermediation, and risk-taking negatively affects the return. Cost-efficient banks are taking more credit risk; however, more efficiency gains reduce banks’ risk substantially. Size (cost of intermediation) of banks positively (inversely) affect the risk-taking (efficiency) behaviour of banks. Market competition enhances the risk and efficiency and reduces banks’ interest spread. Finally, the Nonlinear effect of size and market competition is heterogeneous on risk, efficiency, and financial intermediation cost that follows a U-shape curve. This study explicitly addresses two issues: simultaneous effect of financial intermediation, bank risk, and efficiency and validated the nonlinear relationship considering size and market competition effect. |
topic |
cost of financial intermediation risk efficiency gmm estimators market competition |
url |
http://dx.doi.org/10.1080/23322039.2021.1967575 |
work_keys_str_mv |
AT anupamdasgupta relationshipamongcostoffinancialintermediationriskandefficiencyempiricalevidencefrombangladeshicommercialbanks AT niluthpaulsarker relationshipamongcostoffinancialintermediationriskandefficiencyempiricalevidencefrombangladeshicommercialbanks AT mohammadrifatrahman relationshipamongcostoffinancialintermediationriskandefficiencyempiricalevidencefrombangladeshicommercialbanks |
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1721197272708939776 |