The paper incorporates censored tobit regression analysis to detect whether the changes in banking efficiency in Visegrad countries should be explained by country specific environmental factors or the internal variables. The results suggest that the level of efficiency may be explained mainly by banking specific characteristics. The country's environmental factors are likely to be statistically insignificant. Consequently, the paper sheds some light on the issue of the optimal architecture of a banking system. If combined together, the positive effects of capitalization, market concentration and foreign ownership on efficiency indicators suggest that banking sectors with few large, well capitalized banks owned by strategic foreign owner are supposed to generate better efficiency and higher rates of intermediation.
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