On the sources of heterogeneity in banking efficiency literature

This study reviews the empirical literature on banking efficiency by conducting a meta-regression analysis. The meta-dataset consists of 1661 observations retrieved from 120 papers published over the period 2000–2014. While the role of study design and method-specific characteristics of primary studies is evaluated, the focus concerns regulation in banking. The results are fourfold. First, parametric methods always yield lower levels of banking efficiency than nonparametric studies. Second, banking efficiency is higher in studies using the value-added approach rather than the intermediation method. Third, efficiency scores also depend on the journal’s ranking and on the number of observations and variables used in the primary papers. Finally, regulation matters: primary papers focusing on countries with a liberalized banking industry provide higher values for efficiency scores.