Management Cost Efficiency and Technology Gap: Cooperative vs. Non-Cooperative Credit Banks

Abstract This paper analyses the difference between cooperative and non-cooperative banks in Italy in terms of managerial efficiency and technological inefficiency. We disentangle the metafrontier and group-specific frontiers using data from 1994 to 2015, decomposing the efficiency scores of the two bank groups into cost-efficiency scores and cost technology gap ratios. Cooperative banks have greater efficiency scores across all regions and for each group-specific technology frontier. The findings indicate that the primary cause of inefficiency for the two bank groups is not management inefficiency but rather the technology gap. Furthermore, cooperative banks exhibit lower cost efficiency inequality than non-cooperative banks in most regions.