A Productivity analysis of Eastern European banking taking into account risk decomposition and environmental variables (original) (raw)
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European Journal of Operational Research, 2011
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Technological and environmental differences in the European banking industries
Journal of Financial Services …, 2001
This paper analyzes the productive differences of banking among countries. It proposes a Malmquist type index that allows intercountry productivity differences to be broken down into pure technological differences and differences due to environmental effects. The most relevant feature of this index is its symmetry, since it avoids the problem of measurements being sensitive to the choice of the benchmark country. This index is used to explain the productivity gaps of banking industries across four major countries in Europe as well as the productivity gains that banks could obtain using alternative technologies or with different environments. An output distance function is de®ned and the stochastic frontier approach used to carry out the comparison.
The Productivity of European Banking Sector: A Review of the post-2000 Literature
UTMS Journal of Economics, 2019
Numerous bank productivity studies indicate rapid changes in the structure of the financial services industry and advances in financial and nonfinancial technologies. Based on the literature review, this paper analyses the theoretical background of two concepts of performance evaluation – the terms efficiency and productivity, and empirically, the performance evaluation of banks, i.e., the measurement of the productivity and research results of previous authors’ studies of the European banking sector applying different scientific methods. Non-parametric or parametric techniques, such as DEA with the Malmquist total factor productivity index or SFA method, are increasingly being used to evaluate the productivity of banks and other financial institutions. The measurement of bank productivity is of vital importance from both a microeconomic and a macroeconomic point of view. Therefore, the purpose of this paper is to present productivity literature review of the most relevant studies of the European banking sector published after year 2000. The main results of this research will be the comparative analysis of different empirical scientific studies regarding banking sector productivity evaluation.
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European Journal of Operational Research, 2009
a b s t r a c t 23 This paper performs comparative analysis of the non-radial Russell output technical efficiency measures 24 of 13 Eastern European banking systems assuming a banking production with risk as an undesirable out-25 put and where output components can be negative. This is analysed utilizing three modelling specifica-26 tions; the intermediation, production and profit methodologies. Along with distribution and inter-27 distribution mobility analysis of the efficiency scores across alternative methodologies, we also estimate 28 and statistically compare the distributions of estimated efficiency scores using the bootstrap-based 29 Simar-Zelenyuk-adapted-Li test. The results suggest that although the efficiency levels differ across 30 the approaches, change in positions of the banks relative to the mean is not substantial across the three 31 methodologies.
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Since 2001, when a new cycle in the process of economic transition was vigorously launched in the country, the Serbian banking sector has incurred deep changes. This issue has acutely affected the banking sector in Serbia proper, directly influencing its performance and efficiency. This paper deals with the application of a new statistical approach – the I-distance method - in measuring the financial performance of banks that do business in Serbia in order to determine their productivity level, thus stressing the performance of banks from the perspective of productivity. Additionally, this point of view is essential for projecting productivity in evaluating overall bank operation efficiency.
Productivity Change in European Banks in the Post-Crisis Period
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The paper analyses the productivity change of a balanced panel of 1915 European banks during the 2013–2018 post-crisis period. To study productivity changes, the paper applies the non-parametric output-oriented Data Envelopment Analysis (DEA) approach and the Malmquist productivity index (MPI). The total productivity change estimated by the MPI is further decomposed into technical efficiency change and technological change. The overall MPI estimates show a modest increase in the productivity of banks in half of the EU countries. Further decomposition of the MPI indicates that the productivity growth was mainly a result of technological improvement, which was particularly high among the new EU member states, whereas there was a significant drop in technical efficiency. The productivity growth was higher among banks in the non-euro area and among savings banks. The practical implications drawn from the paper are that European banks should further develop their business models to ratio...
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Modelling risk in efficiency and productivity analysis of banking systems
We argue in this paper that the standard intermediation specification in the banking efficiency and productivity analysis literature has difficulty incorporating risk, and we first review the literature to discover alternative specifications of bank objectives in constructing risk based performance measures including the role of equity capital. We also show in this paper, however, that strong loan growth without complementary input change is consistent not only with scale efficiency improvement but also with weaker loan risk management, and that productivity component analysis may provide risk measures. We review some recent empirical work on European, Asian, and Russian banking systems to demonstrate these arguments. Finally, we argue that a different approach to modelling the activity of banking firms may be useful. Our suggested model is related to the investment trust performance literature where risk is treated as an input and return is an output.