Abstract

http://ssrn.com/abstract=1137953
 
 

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Estimating and Analyzing the Efficiency and Productivity of Bank Branches: Evidence from Greece


Chrysovalantis Gaganis


University of Crete - Faculty of Social Sciences - Department of Economics

Aggeliki Liadaki


Technical University of Crete (TUC) - Department of Production Engineering and Management

Michael Doumpos


Technical University of Crete (TUC) - Department of Production Engineering and Management

C. Zopounidis


Technical University of Crete (TUC) - Department of Production Engineering and Management

2008

Managerial Finance, Forthcoming

Abstract:     
The purpose of this study is to examine the efficiency and productivity of a Greek bank's branches. The sample consists of 458 branches of a Greek commercial bank, operating in 13 regions of Greece over the period 2002-2005, a total of 1,795 observations. We first use data envelopment analysis (DEA) to explore the efficiency and productivity of the branches. Then, we use fixed and random effects models to determine the impact of internal and external factors on the efficiency and productivity scores.

The results indicate that the branches in our sample could have achieved improved overall performance during 2002-2005. Also, our results indicated that the inclusion of loan loss provisions as an input variable increases the efficiency score, but for the total factor productivity change, the results are mixed. The second stage regressions indicate that both the logarithm of personnel and the logarithm of income per capita in the local market have a significant impact on efficiency, while the loans to total assets ratio has a significant impact on pure technical efficiency only.

When we regress the various productivity change measures over our explanatory variables, we find that the logarithm of per capita gross fixed capital formation has a positive and statistically significant impact on all measures. We also find that the return on assets, the loans to deposit ratio, the logarithm of personnel, and the logarithm of income of per capita, all have a positive and statistically significant impact on overall efficiency change.

We differentiate our study from previous ones in three aspects. First, this is the first study on Greek branches which examines the impact of market conditions. Second, we examine the impact of risk-taking on the efficiency of branches. Third, the present study examines the productivity growth of the branch network using the Malmquist TFP index.

Keywords: Branch Banking, Data Envelopment Analysis, Efficiency, Productivity

JEL Classification: G21, C67, D61

Accepted Paper Series





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Date posted: May 27, 2008  

Suggested Citation

Gaganis, Chrysovalantis and Liadaki, Aggeliki and Doumpos, Michael and Zopounidis, C., Estimating and Analyzing the Efficiency and Productivity of Bank Branches: Evidence from Greece (2008). Managerial Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1137953

Contact Information

Chrysovalantis Gaganis
University of Crete - Faculty of Social Sciences - Department of Economics ( email )
University Campus
Rethymno, Crete, 74100
Greece
HOME PAGE: http://economics.soc.uoc.gr/Personnel/personnel_navigation.php?lang=eng&id=57
Aggeliki Liadaki
Technical University of Crete (TUC) - Department of Production Engineering and Management ( email )
University Campus
Chania
Crete, 73100
Greece
Michael Doumpos
Technical University of Crete (TUC) - Department of Production Engineering and Management ( email )
University Campus
Chania
Crete, 73100
Greece
+30 28210 37318 (Phone)
+30 28210 69410 (Fax)
Constantin Zopounidis (Contact Author)
Technical University of Crete (TUC) - Department of Production Engineering and Management ( email )
University Campus
Chania
Crete, 73100
Greece
+30 28210 37236 (Phone)
+30 28210 69410, 37236 (Fax)
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