Determinants of Commercial Bank Performance in Transition : An Application of Data Envelopment Analysis
Banking sectors in transition economies have experienced major transformations throughout the 1990s. While some countries have been successful in eliminating underlying distortions and restructuring their financial sectors, in some cases financial...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2002/06/1808699/determinants-commercial-bank-performance-transition-application-data-envelopment-analysis http://hdl.handle.net/10986/14792 |
| Summary: | Banking sectors in transition economies
have experienced major transformations throughout the 1990s.
While some countries have been successful in eliminating
underlying distortions and restructuring their financial
sectors, in some cases financial sectors remain
underdeveloped and the rates of financial intermediation
continue to be quite low. The authors estimate indicators of
commercial bank efficiency by applying a version of Data
Envelopment Analysis (DEA) to bank-level data from a wide
range of transition countries. They further extend the
analysis by explaining the differences in efficiency between
financial institutions and countries by a variety of
macroeconomic, prudential, and institutional variables. In
addition to stressing the importance of some bank-specific
variables, the censored Tobit analysis suggests that: 1)
Foreign ownership with controlling power and enterprise
restructuring enhance commercial bank efficiency. 2) The
effects of prudential tightening on the efficiency of banks
vary across different prudential norms. 3) Consolidation is
likely to improve efficiency of banking operations. Overall,
the results confirm the usefulness of DEA for
transition-related applications and may shed light on the
optimal architecture of a banking system. |
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