Cost and profit efficiency in banking: an international comparison of Europe, Japan and the USA

Abstract

This study analyses the cost and profit efficiency of a sample of 14 countries of the European Union, as well as Japan and the USA. The results obtained show that since the start of the 1990s increasing competition has led to gains in profit efficiency in the USA and Europe but not so in the Japanese banking system. The results also show that the inequalities of profitability between countries would be considerably reduced if inefficiency were eliminated, efficiency gains thus being a very important source of improvement in profitability.