THE COMPARATIVE EFFICIENCY PERFORMANCE OF SMALL AND LARGE US COMMERCIAL-BANKS IN THE PREDEREGULATION AND POSTDEREGULATION ERAS

The purposes of this paper are twofold: first, to employ a flexible no n-parametric approach to contrast the productive efficiency of a sampl e of small and large banks in order to examine the relationship betwee n size and productive performance in the banking industry. Second, to investigate whether the relative efficiency performance of small and l arge banks has changed following the changes in the banking environmen t in the 1980s and to contrast the rate of technological change achiev ed by these two groups of banks over this time period. The findings ba sed on group-specific frontiers suggest that in the pre-deregulation e nvironment small banks were more efficient than the large banks while in the deregulated environment small and large banks were equally effi cient. Moreover, the dispersion in the efficiency measures of the smal l banks is found to have increased substantially while that of the lar ge banks changed little over the sample period.