IDEAS home Printed from https://ideas.repec.org/a/hur/ijaraf/v5y2015i4p11-21.html
   My bibliography  Save this article

Efficiency Evaluation of European Financial Cooperative Sector. A Data Envelopment Analysis Approach

Author

Listed:
  • Clements Adeyinka Akinsoyinu

Abstract

The establishment of appropriate corporate governance mechanisms is a basic measure for the efficient use of resources, improvement of accountability, transparency, observance of fairness and the rights of all stakeholders of the company. Each of the intra and inter organizational mechanisms monitor the processes and activities of the company and improve the accountability to achieve the other strategic objectives of the company. One of these mechanisms is the institutional investors and state ownership. The purpose of this study was to evaluate the effect of governmental ownership on the investment decisions of managers in companies listed in Tehran Stock Exchange. In this study, three aspects of managers’ investment decisions including investment policy, dividend policy and financing policy are used. This study in terms of purpose is applied and in terms of methodology is causal and correlational and finally in terms of tense is ex post facto. Target population of the study includes companies listed in Tehran Stock Exchange. By using systematic elimination sampling, 102 companies during 7 years, i.e. 714 firm-years, are included in the statistical population of the study. The study period is from 2008 to 2014. To test the hypotheses, the linear regression model and ordinary least squares method were used. The results show that state ownership has a significant effect on the investment decisions of managers in all dimensions except investment policy so that it has a significant negative impact on managers’ financing policy and in contrast the state ownership has a significant positive impact on dividend policy. Other findings showed that the company's size has a significant positive impact on managers’ decision about dividend policy and financing. Return on assets has a significant positive impact on dividend policy and in contrast the rate of return on assets has a significant positive impact on financing policy. However, no significant impact was observed in the control variables of company’s size and return on assets on the investment decisions of managers. The operating cash flow has a significant positive impact on the investment decisions of managers and has also a significant positive impact on managers’ financing policy but no significant effect was observed on managers’ financing policy.

Suggested Citation

  • Clements Adeyinka Akinsoyinu, 2015. "Efficiency Evaluation of European Financial Cooperative Sector. A Data Envelopment Analysis Approach," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(4), pages 11-21, October.
  • Handle: RePEc:hur:ijaraf:v:5:y:2015:i:4:p:11-21
    as

    Download full text from publisher

    File URL: http://hrmars.com/hrmars_papers/Article_02_Efficiency_Evaluation_of_European_Financial_Cooperative_Sector.pdf
    Download Restriction: no

    File URL: http://hrmars.com/hrmars_papers/Article_02_Efficiency_Evaluation_of_European_Financial_Cooperative_Sector.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bos, J.W.B. & Kool, C.J.M., 2006. "Bank efficiency: The role of bank strategy and local market conditions," Journal of Banking & Finance, Elsevier, vol. 30(7), pages 1953-1974, July.
    2. Ferrier, G. D. & Kerstens, K. & Vanden Eeckaut, P., 1994. "Radial and nonradial technical efficiency measures on a DEA reference technology: a comparison using US banking data," LIDAM Reprints CORE 1156, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Andrew Worthington, 1998. "Efficiency in Australian building societies: an econometric cost function approach," Applied Financial Economics, Taylor & Francis Journals, vol. 8(5), pages 459-467.
    4. Berger, Allen N. & Mester, Loretta J., 2003. "Explaining the dramatic changes in performance of US banks: technological change, deregulation, and dynamic changes in competition," Journal of Financial Intermediation, Elsevier, vol. 12(1), pages 57-95, January.
    5. Joseph P. Hughes & Loretta J. Mester, 2008. "Efficiency in banking: theory, practice, and evidence," Working Papers 08-1, Federal Reserve Bank of Philadelphia.
    6. Koetter, Michael & Karmann, Alexander & Fiorentino, Elisabetta, 2006. "The cost efficiency of German banks: a comparison of SFA and DEA," Discussion Paper Series 2: Banking and Financial Studies 2006,10, Deutsche Bundesbank.
    7. Cristian Barra & Sergio Destefanis & Giuseppe Lubrano Lavadera, 2013. "Regulation and the Crisis: The Efficiency of Italian Cooperative Banks," CSEF Working Papers 338, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    8. Mohammad Abdelkarim Almumani, 2013. "The Relative Efficiency of Saudi Banks: Data Envelopment Analysis Models," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(3), pages 152-161, July.
    9. Agoraki, Maria-Eleni K. & Delis, Manthos D. & Pasiouras, Fotios, 2011. "Regulations, competition and bank risk-taking in transition countries," Journal of Financial Stability, Elsevier, vol. 7(1), pages 38-48, January.
    10. Rym Ayadi & Georges Pujals, 2005. "Banking Mergers and Acquisitions in the EU: Overview, Assessment and Prospects," SUERF Studies, SUERF - The European Money and Finance Forum, number 2005/3 edited by Morten Balling, May.
    11. Berger, Allen N. & Humphrey, David B., 1997. "Efficiency of financial institutions: International survey and directions for future research," European Journal of Operational Research, Elsevier, vol. 98(2), pages 175-212, April.
    12. Boussofiane, A. & Dyson, R. G. & Thanassoulis, E., 1991. "Applied data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 52(1), pages 1-15, May.
    13. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    14. Lee, Tung-Hao & Chih, Shu-Hwa, 2013. "Does financial regulation affect the profit efficiency and risk of banks? Evidence from China's commercial banks," The North American Journal of Economics and Finance, Elsevier, vol. 26(C), pages 705-724.
    15. Barros, Carlos Pestana & Managi, Shunsuke & Matousek, Roman, 2012. "The technical efficiency of the Japanese banks: Non-radial directional performance measurement with undesirable output," Omega, Elsevier, vol. 40(1), pages 1-8, January.
    16. Nikolay Nenovsky & Petar Chobanov & Gergana Mihaylova & Darina Koleva, 2008. "Efficiency of the Bulgarian Banking System: Traditional Approach and Data Envelopment Analysis," Working paper series 12008en, Agency for Economic Analysis and Forecasting.
    17. Michael Graff & Alexander Karmann, 2006. "What Determines the Finance-growth Nexus? Empirical Evidence for Threshold Models," Journal of Economics, Springer, vol. 87(2), pages 127-157, March.
    18. Ha Vu & Sean Turnell, 2011. "Cost and Profit Efficiencies of Australian Banks and the Impact of the Global Financial Crisis," The Economic Record, The Economic Society of Australia, vol. 87(279), pages 525-536, December.
    19. Pasiouras, Fotios & Tanna, Sailesh & Zopounidis, Constantin, 2009. "The impact of banking regulations on banks' cost and profit efficiency: Cross-country evidence," International Review of Financial Analysis, Elsevier, vol. 18(5), pages 294-302, December.
    20. Altunbas, Yener & Evans, Lynne & Molyneux, Philip, 2001. "Bank Ownership and Efficiency," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(4), pages 926-954, November.
    21. Resti, Andrea, 1997. "Evaluating the cost-efficiency of the Italian Banking System: What can be learned from the joint application of parametric and non-parametric techniques," Journal of Banking & Finance, Elsevier, vol. 21(2), pages 221-250, February.
    22. Iveta Repkova, 2013. "Estimation of Banking Efficiency in the Czech Republic: Dynamic Data Envelopment Analysis," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 4, pages 261-275, December.
    23. Vivas, Ana Lozano, 1997. "Profit efficiency for Spanish savings banks," European Journal of Operational Research, Elsevier, vol. 98(2), pages 381-394, April.
    24. Fiordelisi, Franco & Mare, Davide Salvatore, 2013. "Probability of default and efficiency in cooperative banking," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 26(C), pages 30-45.
    25. Sherman, H. David & Gold, Franklin, 1985. "Bank branch operating efficiency : Evaluation with Data Envelopment Analysis," Journal of Banking & Finance, Elsevier, vol. 9(2), pages 297-315, June.
    26. Fung, Michael K., 2006. "Scale economies, X-efficiency, and convergence of productivity among bank holding companies," Journal of Banking & Finance, Elsevier, vol. 30(10), pages 2857-2874, October.
    27. Niels Hermes & Vu Thi Hong Nhung, 2010. "The impact of financial liberalization on bank efficiency: evidence from Latin America and Asia," Applied Economics, Taylor & Francis Journals, vol. 42(26), pages 3351-3365.
    28. Tara Deelchand & Carol Padgett, 2009. "Size and Scale Economies in Japanese Cooperative Banking," ICMA Centre Discussion Papers in Finance icma-dp2009-02, Henley Business School, University of Reading.
    29. Kuen-Horng Lu & Min-Li Yang & Feng-Kai Hsiao & Hsin-Yi Lin, 2007. "Measuring the operating efficiency of domestic banks with DEA," International Journal of Business Performance Management, Inderscience Enterprises Ltd, vol. 9(1), pages 22-42.
    30. Michael Devaney & William Weber, 2000. "Productivity growth, market structure, and technological change: evidence from the rural banking sector," Applied Financial Economics, Taylor & Francis Journals, vol. 10(6), pages 587-595.
    31. Zuzana Iršová & Tomáš Havránek, 2010. "Measuring Bank Efficiency: A Meta-Regression Analysis," Prague Economic Papers, Prague University of Economics and Business, vol. 2010(4), pages 307-328.
    32. Mihăiță-Cosmin M. POPOVICI, 2014. "Impact Of Financial Crisis On Banking Efficiency: Evidence From Romania," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 3, pages 451-456, April.
    33. B. Golany & J. E. Storbeck, 1999. "A Data Envelopment Analysis of the Operational Efficiency of Bank Branches," Interfaces, INFORMS, vol. 29(3), pages 14-26, June.
    34. Ms. Elena Loukoianova, 2008. "Analysis of the Efficiency and Profitability of the Japanese Banking System," IMF Working Papers 2008/063, International Monetary Fund.
    35. Sealey, Calvin W, Jr & Lindley, James T, 1977. "Inputs, Outputs, and a Theory of Production and Cost at Depository Financial Institutions," Journal of Finance, American Finance Association, vol. 32(4), pages 1251-1266, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wu, Po-Chin & Liu, Shiao-Yen & Zhai, Rui-Xiang, 2018. "Nonlinear impacts of operating risk and demand management policy on banks’ performance: The role of leading indicator," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 40-53.
    2. Warda Nadeem & Nadeem Iqbal & Hassan Hanif, 2022. "Assessing the Determinants of Efficiency: An Empirical Evidence from Developing Economy," Journal of Economic Impact, Science Impact Publishers, vol. 4(1), pages 71-80.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lee, Tung-Hao & Chih, Shu-Hwa, 2013. "Does financial regulation affect the profit efficiency and risk of banks? Evidence from China's commercial banks," The North American Journal of Economics and Finance, Elsevier, vol. 26(C), pages 705-724.
    2. Bader, Mohammed Khaled I. & Mohamad, Shamsher & Ariff, Mohamed & Hassan, Taufiq, 2008. "Cost, Revenue, And Profit Efficiency Of Islamic Versus Conventional Banks: International Evidence Using Data Envelopment Analysis," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 15, pages 24-76.
    3. Francesco Aiello & Graziella Bonanno, 2018. "On The Sources Of Heterogeneity In Banking Efficiency Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 32(1), pages 194-225, February.
    4. Giokas, Dimitris I., 2008. "Assessing the efficiency in operations of a large Greek bank branch network adopting different economic behaviors," Economic Modelling, Elsevier, vol. 25(3), pages 559-574, May.
    5. Sufian, Fadzlan & Abdul Majid, Muhamed Zulkhibri, 2007. "Bank Ownership, Characteristics and Performance: A Comparative Analysis of Domestic and Foreign Islamic Banks in Malaysia," MPRA Paper 12131, University Library of Munich, Germany, revised 01 Jun 2007.
    6. Agostino, Mariarosaria & Ruberto, Sabrina & Trivieri, Francesco, 2023. "The role of local institutions in cooperative banks’ efficiency. The case of Italy," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 84-103.
    7. Eskelinen, Juha & Kuosmanen, Timo, 2013. "Intertemporal efficiency analysis of sales teams of a bank: Stochastic semi-nonparametric approach," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5163-5175.
    8. Tortosa-Ausina, Emili, 2003. "Nontraditional activities and bank efficiency revisited: a distributional analysis for Spanish financial institutions," Journal of Economics and Business, Elsevier, vol. 55(4), pages 371-395.
    9. San-Jose, Leire & Retolaza, Jose Luis & Torres Pruñonosa, Jose, 2014. "Efficiency in Spanish banking: A multistakeholder approach analysis," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 32(C), pages 240-255.
    10. Md. Hashibul Hassan & Mahmudul Hassan, 2018. "Cost efficiency of banking sector of Bangladesh: evidence using the stochastic frontier analysis," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 8(6), pages 208-224, June.
    11. Mai, Nhat Chi, 2015. "Efficiency of the banking system in Vietnam under financial liberalization," OSF Preprints qsf6d, Center for Open Science.
    12. Sufian, Fadzlan, 2006. "The Efficiency Of Islamic Banking Industry: A Non-Parametric Analysis With Non-Discretionary Input Variable," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 14, pages 54-87.
    13. Benjamin Miranda Tabak & Daniel Oliveira Cajueiro & Marina V. B. Dias, 2014. "The Efficiency of Chinese Local Banks: A comparison of DEA and SFA," Working Papers Series 346, Central Bank of Brazil, Research Department.
    14. Fadzlan Sufian & Fakarudin Kamarudin, 2014. "The impact of ownership structure on bank productivity and efficiency: Evidence from semi-parametric Malmquist Productivity Index," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-27, December.
    15. Chu, Sing Fat & Lim, Guan Hua, 1998. "Share performance and profit efficiency of banks in an oligopolistic market: evidence from Singapore," Journal of Multinational Financial Management, Elsevier, vol. 8(2-3), pages 155-168, September.
    16. Francesco Aiello & Graziella Bonanno, 2018. "Multilevel empirics for small banks in local markets," Papers in Regional Science, Wiley Blackwell, vol. 97(4), pages 1017-1037, November.
    17. Fakarudin Kamarudin & Bany Ariffin Amin Nordin & Junaina Muhammad & Mohamad Ali Abdul Hamid, 2014. "Cost, Revenue and Profit Efficiency of Islamic and Conventional Banking Sector: Empirical Evidence from Gulf Cooperative Council Countries," Global Business Review, International Management Institute, vol. 15(1), pages 1-24, March.
    18. Nikolay Nenovsky & Martin Ivanov & Gergana Mihaylova, 2008. "The Evolution of Bulgarian Banks' Efficiency During the Twenties: A Dea Approach," Working Papers 82, Bank of Greece.
    19. Kalyvas, Antonios Nikolaos & Mamatzakis, Emmanuel, 2017. "Do creditor rights and information sharing affect the performance of foreign banks?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 50(C), pages 13-35.
    20. Dan Li & Yanfeng Li & Yeming Gong & Jiawei Yang, 2021. "Estimation of bank performance from multiple perspectives: an alternative solution to the deposit dilemma," Journal of Productivity Analysis, Springer, vol. 56(2), pages 151-170, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hur:ijaraf:v:5:y:2015:i:4:p:11-21. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hassan Danial Aslam (email available below). General contact details of provider: http://hrmars.com/index.php/pages/detail/Accounting-Finance-Journal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.