A Principal-Agent Approach for Estimating Firm Efficiency: Revealing Bank Managerial Behavior

Authors

Levent Kutlu, The University of Texas Rio Grande ValleyFollow
Emmanuel Mamatzakis, Open University of Cyprus
Mike G. Tsionas, Lancaster University

Document Type

Article

Publication Date

7-2022

Abstract

We consider agency-theory-based structural and reduced form models of bank performance. In the structural models, we take into account the managerial decision-making processes, and reveal underlying managerial efforts and thereby managerial behavior. In an empirical application, we estimate performance of Eurozone banks using our novel structural and reduced form approaches by Markov Chain Monte Carlo techniques. Our findings show, for the first time, that bank underperformance persists in the Eurozone whereas considerable variability across Member States exists. Our agency-theory-based structural modeling would favor cooperation of all interested parties and towards higher financial integration.

Comments

Original published version available at https://doi.org/10.1016/j.intfin.2022.101576

Recommended Citation

Kutlu, L., Mamatzakis, E. and Tsionas, M.G., 2022. A principal–agent approach for estimating firm efficiency: Revealing bank managerial behavior. Journal of International Financial Markets, Institutions and Money, 79, p.101576. https://doi.org/10.1016/j.intfin.2022.101576

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.

Publication Title

Journal of International Financial Markets, Institutions and Money

DOI

10.1016/j.intfin.2022.101576