Int. Fin. Markets, Inst. and Money 19 (2009) 1–15 Available online at www.sciencedirect.com Bank modelling methodologies: A comparative non-parametric analysis of efficiency in the Japanese banking sector Leigh Drake a , Maximilian J.B. Hall b , Richard Simper b,∗ a Nottingham University Business School, Jubilee Campus, Wollaton Road, Nottingham NG8 1BB, UK b Department of Economics, Loughborough University, Ashby Road, Loughborough LE11 3TU, UK Received 22 March 2005; accepted 19 May 2007 Available online 31 May 2007 Abstract This study examines the efficiency of the Japanese banking system utilising the slacks-based measure. In addition, we also extend the comparative bank modelling methodology literature by utilising both the intermediation and production approaches, together with the profit/revenue-based approach, proposed in [Berger, A.N., Mester, L.J., 2003. Explaining the dramatic changes in performance of US banks: technological change, deregulation, and dynamic changes in competition. J. Financial Intermed. 12, 57–95]. We find that, across the three methodologies, there are marked differences in: mean efficiency scores; the dispersion of efficiency scores; and the ranking of banks and bank sectors. Hence, the results demonstrate a very high degree of modelling dependence, which has importance in the context of policy responses. © 2007 Elsevier B.V. All rights reserved. JEL classification: B4; C1; G2 Keywords: Efficiency; Japanese banking 1. Introduction Since the bursting of the asset price bubble in the late-1980s, the Japanese banks have faced a number of serious problems. These comprise, inter alia (Hall, 1999; IMF, 2003; Kuroda, 2003): ∗ Corresponding author. Tel.: +44 1509 222732; fax: +44 1509 223910. E-mail address: r.simper@lboro.ac.uk (R. Simper). 1042-4431/$ – see front matter © 2007 Elsevier B.V. All rights reserved. doi:10.1016/j.intfin.2007.05.002