A study of cost efficiency and privatisation in Taiwan's banks: The impact of the Asian financial crisis

There is evidence to suggest that the Asian financial crisis has undermined cost efficiency, technical efficiency and allocative efficiency in Taiwan's banks, when a data envelopment analysis method is employed. Estimated results show that privately owned banks had higher cost efficiency than that of publicly owned banks in 1994-1996. However, the tide turned in 1997-2000, with cost efficiency of privately owned banks lower than publicly owned banks. The rate of return of banks and bank loss on bad loans would be the major reasons.