Operational Efficiecny in the Greek Banking Industry: Evidence from the Stochastic Frontier Approach and Error Decomposition
International Review of Economics and Business (RISEC), Vol. 50, No. 4, 2003
Posted: 24 Jun 2008
Date Written: 2003
The goal of this study is to measure X-efficiency of the banking industry in Greece, through the methodology of a stochastic frontier. The empirical results show that Greek banks are characterized by a significant inefficiency measure, running up to virtually 29%, even following substantial deregulation activities in the monetary sector. In addition, error decomposition tests reveal that the presence of inefficiency is mainly attributed to high operating costs, i.e. administration costs, personnel costs, and loans monitoring costs.
Keywords: Operational efficiency, Banks, Stochastic frontier, Error decompositions, Greece
JEL Classification: G21
Suggested Citation: Suggested Citation