Post-crisis cost efficiency of Jamaican banks

Deregulation, re-regulation and continuing globalization embody an imperative that banks increase efficiency in order to survive. We employ the Simar-Wilson (2007) two-step double bootstrap Data Envelopment Analysis (DEA) method to measure whether cost efficiency among Jamaican banks has improved between 1998 and 2009 following a number of post-crisis responses aimed at strengthening and improving the sector. Efficiency is extracted from a meta-frontier construction for the full sample period. In addition, we conduct tests for unconditional β-convergence and σ-convergence; overall, the results suggest that there has been a tendency towards improvement in bank efficiency levels for the industry as a whole, but there is also evidence that foreign banks show a higher trend improvement in efficiency.