This paper suggests a link between bank operating efficiency and feder
al supervisor. Since supervisory priorities can vary by the context in
which the supervisor was conceived, resulting differences in supervis
ory policies and procedures may underlay differences in the operating
efficiency of their supervised banks. The effect on bank operating exp
enses is estimated at the individual bank level for each of four size
strata using a translog cost function, controlling for bank characteri
stics and the impact of scale and scope economies. Results generally s
upport a conclusion that bank operating cost differences exist by supe
rvisor, except in the largest size stratum.