Efficiency of Banks in Croatia: A DEA Approach

Abstract

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.

Influence of board and ownership structure on bank profitability: evidence from South East Europe

“…This result is consistent with the argument that ownership concentration in transition economies may provide negative effect on performance because inadequate protection of minority shareholders may provide majority shareholder with a possibility to expropriate substantial amounts of corporate wealth (Filatotchev et al, 2001). After controlling for bank specific factors, we also find that privately held domestic banks outperform both state-owned and foreign banks, which is surprising given the findings from previous studies finding that foreign banks outperform domestic banks (Claessens et al, 2001;Jemrić & Vujičić, 2002;Micco et al, 2007;Tochkov & Nenovsky, 2011). This finding may be due to the fact that privately held banks in our sample have much lower CONC and smaller boards, as factors negatively related with bank profitability, than state-owned and foreign banks.…”

“…Majority of studies find that privatedomestic banks are more profitable than state-owned banks, while foreign banks are more profitable than private-domestic banks operating in emerging and transition economies (Claessens, Demirguc-Kunt, & Huizinga, 2001;Jemrić & Vujičić, 2002;Micco, Panizza, & Yanez, 2007;Tochkov & Nenovsky, 2011). Micco et al (2007) find that state-owned banks located in developing countries are less profitable than their private counterparts and stress that their result may be due to the fact that developing countries are less than high-income countries equipped to deal with the distortions that arise from government ownership of banks.…”

Bank performance and the financial crisis: evidence from Kazakhstan

“…There is no consensus in the banking performance literature on whether foreign owned banks are more e¢ cient than their domestic counterparts. For example, Jemric and Vujcic (2002) …nd that foreign owned banks in Croatia are far more e¢ cient than domestic banks. Similarly, Weill (2003) …nds that foreign owned banks in Poland and the Czech Republic are more e¢ cient than domestic banks, which he attributes to foreign banks having more human capital and better corporate governance.…”

Performance Analysis and Benchmarking of Commercial Banks Operating in Bosnia and Herzegovina: a DEA Approach

“…In their study, Jemric and Vujcic (2002) used data for the period between 1995 and 2000, taking interest and related costs, commissions for services and related costs and administrative costs as their inputs and interest and related revenues as their outputs. For analytical purposes, banks are grouped according to ownership structure: state owned, private domestic and foreign, and according to age: old (founded before 1990) and new (founded in 1990 or later).…”