Bank efficiency, regulation and response to crisis of financial institutions in selected Asian countries 1

With the pace of financial-market liberalization, financial institutions are facing increasing competition and greater volatility from external shocks. In such an environment, efficient banks and financial institutions will have greater competitive advantage. Banking efficiency is also important to maintain the stability of the financial markets (Berger et al., 1993; Schaeck et al., 2009). Efficient banks are, in addition, better able to diversify their activities and channel funds effectively to economically viable activities in the economy, thereby providing greater stability for the economy.