Estimating the Technical and Scale Efficiency of Greek Commercial Banks: The Impact of Credit Risk, Off-Balance Sheet Activities, and International Operations

Research in International Business and Finance, Vol. 22, pp. 301-308, 2008

38 Pages Posted: 25 Oct 2006 Last revised: 26 Jan 2009

Abstract

This paper uses data envelopment analysis (DEA) to investigate the efficiency of the Greek commercial banking industry over the period 2000-2004. Our results indicate that the inclusion of loan loss provisions as an input increases the efficiency scores, but off-balance sheet items do not have a significant impact. The differences between the efficiency scores obtained through the profit-oriented and the intermediation approaches are in general small. Banks that have expanded their operations abroad appear to be more technical efficient than those operating only at a national level. Higher capitalization, loan activity, and market power increase the efficiency of banks. The number of branches has a positive and significant impact on efficiency, but the number of ATMs does not. The results are mixed with respect to variables indicating whether the banks are operating abroad through subsidiaries or branches.

Keywords: Banks, DEA, Efficiency, Greece

JEL Classification: G21, C24, C67, D61

Suggested Citation

Pasiouras, Fotios, Estimating the Technical and Scale Efficiency of Greek Commercial Banks: The Impact of Credit Risk, Off-Balance Sheet Activities, and International Operations. Research in International Business and Finance, Vol. 22, pp. 301-308, 2008. Available at SSRN: https://ssrn.com/abstract=939524

Fotios Pasiouras (Contact Author)

GSCM-Montpellier Business School ( email )

2300, Avenue des Moulins
Montpellier, 34185
France

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