What explains the technical efficiency of banks in Tunisia? Evidence from a two-stage data envelopment analysis

Jelassi, Mohamed Mehdi; Delhoumi, Ezzeddine

doi:10.1186/s40854-021-00282-w

Cited by 13 publications

(10 citation statements)

References 48 publications

(103 reference statements)

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“…The level of bank concentration measured using the Herfindahl-Hirschman index, insignificantly affects the relative efficiency of all observed bank size categories, similar to the results of Triki et al (2017). Inflation was found to positively affect the efficiency of large and medium-sized banks only, as in Pasiouras et al (2009), Kale et al (2015), and Jelassi and Delhoumi (2021), implying that large and medium-sized banks are more efficient in managing inflation given their more sophisticated risk management practices and diversified portfolios of assets and liabilities.…”

Section: Relative Efficiencies (Efficiency Scores) Years Mean Mediansupporting

confidence: 59%

Size matters: analyzing bank profitability and efficiency under the Basel III framework

Gržeta

Žiković

2023

Financ Innov

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The latest regulatory framework, which has been introduced globally in the form of Basel III, and its implementation in the legislation of the member states of the European Union has generated much interest in the impact of regulation on the efficiency and profitability of banks. This study aims to examine the impact of the introduction of two major regulatory changes (Basel II and Basel III) on bank performance, in terms of bank size and bank-specific and macroeconomic variables. A two-stage empirical analysis was conducted on a sample of 433 European commercial banks over the 2006–2015 period. In the first stage, relative efficiency was calculated using non-parametric data envelopment analysis. In the second stage, the generalized method of moments was used to examine the impact of bank-specific and macroeconomic variables as well as regulation on bank performance, that is, profitability and efficiency. Considering bank size, the results show a diverse impact of regulation on bank performance. Regarding large- and medium-sized banks, regulation positively affects both efficiency and profitability, whereas, for small banks, it negatively affects performance. The results suggest that larger banks have skillfully adapted to the new regulatory environment. In contrast, small banks have problems with profitability and efficiency because the new regulatory framework has imposed additional administrative and regulatory burdens. This could result in future failure or mergers with larger banks, resulting in a higher concentration in the banking sector and increased systemic risk. Our results strongly suggest that regulation should not be implemented equally for all banks; that is, on a one size fits all terms. A distinction between small and large banks when introducing new regulatory frameworks should be made if a reasonable level of competition is to be preserved.

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Section: Relative Efficiencies (Efficiency Scores) Years Mean Mediansupporting

confidence: 59%

Size matters: analyzing bank profitability and efficiency under the Basel III framework

Gržeta

Žiković

2023

Financ Innov

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“…, 2015; Liu et al. , 2017; Jelassi and Delhoumi, 2021). This is because impaired loans represent the majority of non-performing assets in the DMUs.…”

Section: Resultsmentioning

confidence: 99%

“…The data from the current study reveals that the proxy to measure the management capability, which is impaired loan to total asset, is not significant. Productive DMUs have a lower impaired loan-to-asset ratio, a negative relationship that refers to good management ability (Zhu et al, 2015;Liu et al, 2017;Jelassi and Delhoumi, 2021). This is because impaired loans represent the majority of non-performing assets in the DMUs.…”

Section: Regressions Analysismentioning

confidence: 99%

“…Foreign banks are more efficient and productive than domestic banks (Akin et al. , 2013) for banks operating in Turkey from 2007–2010, or vice versa banks operating in India from 1986–2000 (Singh and Thaker, 2016); covers 26 public, 19 private and 21 foreign banks operating in India from 2008–2012 and found government-owned banks are more efficient and productive than privately owned banks or vice versa (Jelassi and Delhoumi, 2021) for banks operating in Tunisia from 1995 2017; and “Islamic banks are more efficient than conventional banks” (Safiullah, 2020) operating in 28 different nations from 2003–2018, or vice versa (Ismail et al. , 2013) banks operating in Malaysia from 2006–2009 (Miah and Sharmeen, 2015), for banks operating in Bangladesh from 2001–2011.…”

Section: Literature Reviewmentioning

confidence: 99%

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Resource-based productivity in the closed banking sector: the case of Ethiopian banks

Tarekegn

Liu²,

Xiao³

2022

IJPPM

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PurposeThe current paper's goal is to examine the productivity of the closed banking sector evidenced from Ethiopia. In addition, the inclusion of intangibles on productivity was examined in the current paper.Design/methodology/approachFirst, the standard Malmquist Productivity Index (MPI) was employed for 13 commercial banks for both stages. Second, by excluding the state-owned commercial bank, the analysis employed a bootstrapped MPI for the robust and comprehensive conclusion. Furthermore, from 2010 to 2019, the fixed effect Ordinary Least Square (OLS) regression with balanced panel data was used.FindingsThe standard MPI in both stages shows that the productivity of Ethiopian commercial banks is declining. The technological shock was the main reason for the loss. The catch-up in both stages scored above unity, mainly due to the pure efficiency change. Besides, when combined with tangible resources, the inclusion of resource-based view (RBV) proxy variables reduces technological shock regress and ultimately improves productivity change. The bootstrapped MPI also reveals that technological shock is the primary source of the productivity decline. However, efficiency change also contributes to the productivity decline based on this estimation.Research limitations/implicationsFuture research could examine the more extensive productivity analysis by considering the primary sources of data collections for resource-based variables.Practical implicationsAccording to the study's results, banking regulatory authorities and bank management, including the shareholders, should continue to invest in cutting-edge technology to improve the productivity of the banking sector.Originality/valueThis is the first comprehensive study of productivity for Ethiopian commercial banks based on the standard MPI, bootstrapped MPI, and OLS by incorporating all resources into the analysis.

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“…The internal determinants are the Corporate Governance of the bank, Enterprise Risk Management, Ownership Structure (state, foreign, and domestic ultimate owned banks), return on equity, financial leverage, and bank size, while the external determinants of the Efficiency of banks are banking structure and macroeconomic condition in the specified Model. Recent studies evaluated bank efficinecy through DEA like [13][14][15][16][17][18][19][20] The current paper provides empirical evidence of institutional theory in the banking sector. The corporate governance practices of banks improve the Efficiency of the banks due to sound governance structure, fewer principal-agent problems, and efficient implementation of rules and regulations.…”

Section: Introductionmentioning

confidence: 92%

Determinants of bank’s efficiency in an emerging economy: A data envelopment analysis approach

2023

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This study aims to assess the influence of internal and external factors on the Efficiency of banks in Pakistan using the Data Envelopment Analysis Approach (DEA). Bank’s Efficiency is measured through DEA Model using input and output variables. The input variable includes the number of employees, number of branches, administration expenses, non-interest expenses, and loan loss provisions. In contrast, the output variable consists of net interest income, net commissions, and total other income. This study considers the internal determinants of the bank’s Efficiency as corporate governance, enterprise risk management, ownership structure (state, foreign, and domestic ultimate owned banks), return on equity, financial leverage, and the size of the bank. The external determinants of the bank’s Efficiency include banking structure and macroeconomic conditions. The study has used data from seventeen commercial banks over the period of 2011 to 2020. The study used the Data Envelopment Analysis Approach (DEA) and Logit and Probit Regression Model to evaluate research hypotheses. The Logit model results show that corporate governance, ultimate global ownership, and return on equity have a statistically significant and positive impact on the bank’s Efficiency. Enterprise risk management and financial leverage adversely affect the bank’s Efficiency. Better corporate governance can help banks to control the risk and cost of capital and enhancement the effectiveness of capital. Similarly, better risk management of banks can lead to better operational and strategic decisions in the competitive banking environment.

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What explains the technical efficiency of banks in Tunisia? Evidence from a two-stage data envelopment analysis

Cited by 13 publications

References 48 publications

Size matters: analyzing bank profitability and efficiency under the Basel III framework

Size matters: analyzing bank profitability and efficiency under the Basel III framework

Resource-based productivity in the closed banking sector: the case of Ethiopian banks

Determinants of bank’s efficiency in an emerging economy: A data envelopment analysis approach

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