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This study uses a stochastic frontier analysis (SFA) model to evaluate the relative cost efficiency of commercial banks in Taiwan in the wake of liberalization. The model is estimated using data made available through Taiwan's Banking Bureau and Financial Supervisory Commission. With data from before and after the 2008 financial crisis, our central result is that banks affiliated with bank holding companies (BHC) have become increasingly more efficient. While unaffiliated banks have generally increased their efficiency, they have not kept pace with respect to efficiency gains. Secondary findings are that, independent of ownership structure, both balance sheet and income statement composition affect efficiency. In particular, bank efficiency increases with growth in loans and capital prices. We also find evidence that labor productivity is a key explanatory factor behind efficiency differences across banks. As a result, a policy recommendation is made that banks invest in maximizing worker productivity. Finally, in addition to the insights gained from this study we contribute to the general literature on both bank efficiency and the use of the SFA model by applying it to new data in a new setting. [ABSTRACT FROM AUTHOR]

The rise of China in the 21st century has generated a new round of debates on American policy toward Taiwan. Generally speaking, one side suggests that Washington should adjust its Taiwan policy to improve its relations with China, while the other argues against downgrading the relations with Taiwan. Both sides invoke the concept of national interest, but the concept is not unproblematic, and cherry-picking different facts and arguments is far from convincing. This article has two purposes: using the concept of national interest to examine the Taiwan policy, and using this case to illuminate the concept itself. After reviewing the concept, I propose what I call ‘four Ps’ framework to facilitate policy-making and analysis. The framework comprises four factors that help determine which policy is in national interest. They are players (decision makers), preferences (foreign policy goals), prospects (possible outcomes), and power (the capability of achieving goals). [ABSTRACT FROM AUTHOR]