Using an unbalanced panel dataset of 5,265 observations from 454 US
banks including 394 commercial and 60 savings banks, and Battese and Coelli
(1995) Stochastic Frontier model, this study has determined the recent level of
cost and profit efficiency estimates of these banks and analysed the impact of
specialization, ownership structure, and size on the cost and profit
efficiency. The results reveal that the
cost efficiency of US commercial and savings banks is statistically higher than
the profit efficiency with a score of 92.1% and 63.59% respectively; the global
financial crisis did not affect cost efficiency much, but it had a shattering
effect on the profit efficiency; the savings banks are more cost efficient than
the commercial banks and commercial banks are more profit efficient than savings
banks; there is no significant differences between the cost and profit
efficiencies of privately and publicly owned banks; foreign banks are less cost
and profit efficient compare to their domestic counterparts; and finally, the
small banks enjoy higher cost and profit efficiency than their large, medium,
and very large counterparts. The other determinants of cost and profit
efficiency were found to be expectedly affecting the cost and profit efficiency
of US banks.
JEL classification numbers: C33,
C67, D22, D24, G01, G21, G32.
Keywords: Cost Efficiency,
Profit Efficiency, US Commercial and Savings Banks, Bank Specialization,
Ownership Structure, Bank Size.