Bank Efficiency and the Effectiveness of Monetary PolicyContemporary Economic Policy
AbstractAdvances in information technology and bank consolidation have altered the way banks operate by necessitating that banks control costs and provide services efficiently to remain competitive. Given the unique role bank operations play in the transmission of monetary policy, a key unresolved question is whether bank efficiency alters monetary policy outcomes. Using a stochastic frontier approach to measure cost-efficiency and panel data of U.S. bank balance sheets, we show that banks with greater cost-efficiency are more sensitive to monetary shocks.
Citation InformationMichael R. Jonas and Sharmila K. King. "Bank Efficiency and the Effectiveness of Monetary Policy" Contemporary Economic Policy Vol. 26 Iss. 4 (2008) p. 579 - 589 ISSN: 1074-3529
Available at: http://works.bepress.com/sharmila-king/3/