Efficiency of Commercial Banks in Bulgaria in the Wake of EU Accession

ICER Working Paper No. 21/2009

35 Pages Posted: 24 Oct 2009

See all articles by Nikolay Nenovsky

Nikolay Nenovsky

Bulgarian National Bank

Kiril Tochkov

Texas Christian University - Department of Economics

Date Written: October 21, 2009

Abstract

The paper examines the efficiency of Bulgarian banks and its determinants over the period 1999-2007. The levels of technical, allocative, and cost efficiency are first estimated using a nonparametric methodology and then regressed upon a number of bank-specific, institutional, and EU-related factors. The findings indicate that foreign banks were more efficient than domestic private banks, although the gap between them narrowed over time. State-owned banks ranked last on average but their privatization resulted in efficiency gains. Capitalization, liquidity, and enterprise restructuring enhanced bank efficiency, while banking reforms had an adverse effect. The Treaty of Accession and EU membership were associated with significant efficiency improvements.

Keywords: transition economies, banking sector, efficiency, EU accession

JEL Classification: C14, G21, P2

Suggested Citation

Nenovsky, Nikolay and Tochkov, Kiril, Efficiency of Commercial Banks in Bulgaria in the Wake of EU Accession (October 21, 2009). ICER Working Paper No. 21/2009 . Available at SSRN: https://ssrn.com/abstract=1492053 or http://dx.doi.org/10.2139/ssrn.1492053

Nikolay Nenovsky (Contact Author)

Bulgarian National Bank ( email )

str "St. Sofia" 5
Sofia, 1040
Bulgaria
+ 359 2 9145 1239 (Phone)
+ 359 2 980 24 25 (Fax)

Kiril Tochkov

Texas Christian University - Department of Economics ( email )

Box 298510
Fort Worth, TX 76129
United States
817-257-7554 (Phone)
817-257-5058 (Fax)

HOME PAGE: http://personal.tcu.edu/ktochkov

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