Title: Cost and profit efficiency of banks in Haiti: do domestic banks perform better than foreign banks?

Authors: Raulin Lincifort Cadet

Addresses: Center for Research in Management and Economic Development (CREGED), Faculty of Economics and Administrative Sciences, Quisqueya University, 118, av. Jean Paul II, Port-au-Prince, Haiti; Daro Consulting, 12, rue Tunnel – Diquini 63, Carrefour, Haiti

Abstract: This paper is, to my knowledge, the first to estimate a stochastic frontier model in which foreign bank ownership interacts with both the frontier and the inefficiency effects. Few studies in this field have focused on countries with a low income level, such as some African and Caribbean nations. This paper considers the case of Haiti, which is an excellent example of a developing economy with a low income level. The results reveal that foreign banks significantly impact both the frontier and the inefficiency effects. Although they enjoy technological progress, compared with domestic banks, foreign banks are less profit efficient.

Keywords: bank costs; domestic banks; foreign banks; cost efficiency; profit efficiency; foreign ownership; Haiti; stochastic frontier modelling; emerging economies; banking industry.

DOI: 10.1504/IJBAAF.2015.070507

International Journal of Banking, Accounting and Finance, 2015 Vol.6 No.1, pp.37 - 52

Received: 26 Feb 2015
Accepted: 26 Feb 2015
Published online: 08 Jul 2015 *

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