Efficiency dynamics of the Croatian banking industry: DEA investigation

Abstract

The paper deals with the efficiency dynamics of the Croatian banking industry, covering the period from 2006 to 2015. We have implemented the intermediation approach, using interest and non-interest expenses and revenues as the input and output variables, respectively. The variable return to scale (BCC) Data Envelopment Analysis (DEA) output-oriented model has been implemented, and we have estimated the crisis-driven efficiency trends, as well as the impact of the EU membership. We further estimated the efficiency effects of the relative market power/size, ownership structure, and origin of capital. The global crisis had detrimental effects since the overall efficiency score dropped by about 3%. On the contrary, Croatian banks have largely benefited from the EU membership, and the efficiency score after the EU association increased by about 45%. The market leaders are more efficient than the competitive fringe, which is in line with the efficiency structure hypothesis. In addition, the biggest banks are the most efficient ones, meaning that the scale efficiency hypothesis has also been upheld. Contrary to the agency theory hypothesis, state-owned banks are permanently more efficient than private banks. Finally, the results support the home-field advantage hypothesis exclusively for the pre-crisis period (2006)(2007)(2008)(2009).

Análisis de eficiencia financiera de las empresas cotizantes en el mercado accionario colombiano para el periodo 2012- 2017

“…De acuerdo con la revisión de la literatura, una de las razones que puede explicar la baja cantidad de unidades eficientes en el mercado accionario colombiano, en comparación con otros mercados de la misma índole, es el crecimiento económico. Es decir, que entre mayor sea el porcentaje de crecimiento de un país, la cantidad de unidades eficientes también tiende a aumentar (Davidovic et al, 2019;Paleèková, 2015). En este sentido, el crecimiento económico promedio de Colombia en el periodo de análisis fue de 3,26 %, mientras que en los países revisados (Irán y Malasia) fue en promedio de 3,81 %; lo anterior según datos de la plataforma oficial del Banco Mundial.…”

Efficiency Analysis of Macedonian and Croatian Banking Sectors with DEA

“…Studies regarding the efficiency of commercial banks in North Macedonia and Croatia using the DEA methodology are not very common. There are six studies assessing the relative efficiency of Macedonian commercial banks with DEA: Cvetkoska (2010), Micajkova and Poposka (2013), Naumovska and Cvetkoska (2014), Naumovska andCvetkoska (2016), Fotova Čiković and and Cvetkoska and Fotova Čiković (2020) on one hand, and seven studies regarding the efficiency of the Croatian banking sector: Jemrić and Vujčić (2002), Toçi (2009), Jurčević and Mihelja Žaja (2013), Tuškan and Stojanović (2016), Kordić and Višković (2018), Pavković et al (2018) and Davidovic,et. al.…”

“…The most recent study is by Davidovic et al (2019). They give new insights regarding the impact of EU accession on bank efficiency.…”

Application of Hybrid Approach in Banking System: An Undesirable Operational Performance Modelling

“…The outcome of the study concluded that the major cause of inefficiency within public banks is scale inefficiency. Davidovic et al (2019) studied the estimated efficiency score of Croatian banking industry and identified the importance of certain banking-related variables such as origin of capital, market size and ownership structure. Rakshit (2019) investigated the performance level of Indian commercial banks by developing the two-stage radial DEA framework, which measures profitability and marketability functions of banks.…”