Abstract:
The paper examines how the type of ownership affects the profit efficiency of Russian banks. Using bank-quarter data for selected banks in the period 2004–2015, we combine stochastic frontier anal-ysis (SFA) methodology with an intermediary approach to assess profit efficiency. Our key findings show that foreign-owned banks are the most efficient, followed by state-owned banks and private domestic banks. We also find that the profit efficiency of foreign-owned banks was higher than that of other banks during the economically stable periods of 2004Q1 to 2008Q2 and 2014Q1 to 2015Q3, and that state-owned banks were more efficient than others in the period of financial turmoil from 2008Q3 to 2013Q4 due to state support. These results are robust when we consider these banks in terms of branch network diversity, risk preferences, and specialization.