Determinants of Bank Efficiency in the Transition Economies in Europe: A Comparison of Frontier Techniques with Panel Data

22 Pages Posted: 26 Mar 2009

See all articles by Meryem Duygun Fethi

Meryem Duygun Fethi

University Leicester School of Management

Karligash Glass

Loughborough University - School of Business and Economics

Mohamed Shaban

University of Leicester - School of Management

Date Written: July 25, 2008

Abstract

This study investigates the evolution of banking efficiency of post-communist new EU member countries over a time span 1998 to 2003. In these transition economies major strides were taken during this period to establish functioning market economies and financial systems for their EU membership in 2004. In light of the EU enlargement, it is significant to examine whether significant efficiency improvements were achieved in their banking systems. Adopting the approach by Sickles (2005), we employ a wide range of non-parametric, semi-parametric and parametric tools to evaluate output efficiency of transition banking. In addition, we analyse the impact of several macroeconomic, banking sector specific and bank specific factors on banking efficiency. The results show that the efficiency estimators are sensitive to the choice of utilized methodology. The impact of the various factors however, is relatively stable among the measurement techniques except the impact of macroeconomic factors.

Keywords: Banking, Efficiency, DEA, econometrics, EU accession

Suggested Citation

Fethi, Meryem Duygun and Glass Kenjegalieva, Karligash and Shaban, Mohamed, Determinants of Bank Efficiency in the Transition Economies in Europe: A Comparison of Frontier Techniques with Panel Data (July 25, 2008). Available at SSRN: https://ssrn.com/abstract=1368271 or http://dx.doi.org/10.2139/ssrn.1368271

Meryem Duygun Fethi (Contact Author)

University Leicester School of Management ( email )

University Leicester
School of Management
Leicester, LE1 7RH
United Kingdom

HOME PAGE: http://www.le.ac.uk/ulsm/academics/mfethi.html

Karligash Glass Kenjegalieva

Loughborough University - School of Business and Economics ( email )

Epinal Way
Leics LE11 3TU
Leicestershire
United Kingdom

Mohamed Shaban

University of Leicester - School of Management ( email )

Leicester
Leicester, AK LE1 4AY
United Kingdom

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