Inefficiency in commercial banks: A quantitative approach to the analysis of bank-specific and macroeconomic factors affecting the commercial banking industry in the Philippines from 2009-2013

• Main Authors: Carino, Michelle, Catacutan, Joyce, Mathay, Felipe, Penas, Angelica
• Format: text
• Language: English
• Published: Animo Repository 2015
• Subjects: Banks and banking > Philippines; Bank assets > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/6310
• Institution: De La Salle University

This study examines the factors of cost efficiency consisting of commercial banks operating in the Philippines. For the purposes of this research, inefficiency is strictly described as the cost-to-income ratio based on its accounting definition. Using a dataset of 11 publicly listed commercial banks in the Philippines for the period of 2009-2013 and panel data regression analysis, the researchers then regress the cost inefficiency, being the dependent variable, with economic variables (economic growth and inflation rate) and bank-specific variables (asset size, loan loss provision, personnel expenses to total expense, capital adequacy ratio, and liquidity). After performing the Hausman test, results show that the apropriate technique used for this dataset is the random effects regression model. Among the aforementioned variables, only the asset size of the bank, loan loss provision to gross loan, and liquidity (current ratio) have been proven to be significant in explaining the CIR.