Bank efficiency analysis: A production DEA approach under CRS


Abstract For performance evaluation purposes of an economic entity, one should consider different aspects of its activity. In case of banks this objective is quite difficult since they offer a wide range of services and the activities performed are such complex. Researchers all over the world have adopted different approaches and techniques for bank evaluation from different point of view: from shareholder`s or regulators. In this study we propose a non-parametric approach for bank evaluation known as Data Envelopment Analysis (DEA). DEA, as a non-parametric approach, is a data oriented model for evaluation of relative efficiency of a set of economic entities. For this study is chosen the production approach for variable selection purposes under constant returns to scale condition. The analysis was based on the annual reports of the banks from 2006-2013. We found that larger and smaller size banks can be either efficient and the inefficiencies are found also from different capital ownership.
Key words efficiency, production approach, constant returns to scale
JEL classification G21, C14, C61, C88