An understanding of a bank's relative efficiency is important for analysts, practitioners and policymakers alike. In this paper, we analyze bank efficiency in Croatia between 1995 and 2000, using Data Envelopment Analysis. We find that foreign-owned banks are on average most efficient, that the new banks are more efficient than the old ones, and that smaller banks are globally efficient but large banks appear to be efficient when we allow for variable returns to scale. We also find that there has been strong equalization in terms of average efficiency in the Croatian banking market, both between and within the peer groups of banks.

The aim of this paper is to quantify the effects of changes in functional income

Wage structure, Earning regression, Return to education, J31, P23, P52,

Croatia is already much more euroised than any of the first wave accession countries. The paper demonstrates that Croatia has a strong incentive to adopt euro as soon as it becomes feasible. Costs of doing so are smaller because the degrees of freedom for an independent monetary policy-making are already reduced, while the benefits are higher. A special benefit that a heavily euroised economy derives from formally adopting the euro is removal of relatively high costs of prudential regulation connected to the balance sheet risk and a possible run on the foreign exchange liabilities of the banking system. This would in turn substantially reduce costs of financial intermediation and interest rate spreads. Our analysis suggests that in a highly euroised economy, the costs of euro adoption are smaller and the benefits are larger than in a non-euroised economy. Comparative Economic Studies (2004) 46, 159–176. doi:10.1057/palgrave.ces.8100042