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Determinants of Macedonian Banks Efficiency

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  • Vesna Micajkova

Abstract

The purpose of this paper is to determinate the influence of risk management on efficiency of Macedonian banks. A regression models have been created where technical, pure technical and scale efficiency estimates are used as dependent variables. The efficiency estimates have been made using data envelopment analysis. Indicators from four different classes of risk (profitability, capital adequacy, assets quality and liquidity) for period 2008-2011 have been used as independent variables. The models’ results indicate that a hypothesis about existence of significant relationship between banks’ efficiency and profitability can be rejected. Significant relationship between banks’ efficiency and capital adequacy and assets quality has been detected. The relationship is negative in both cases. The strongest statistical correlation has been detected in case of banks’ efficiency and banks’ liquidity. This correlation is also negative, meaning that a rise in liquidity will lead to an efficiency decrease and vice versa.

Suggested Citation

  • Vesna Micajkova, 2015. "Determinants of Macedonian Banks Efficiency," International Journal of Empirical Finance, Research Academy of Social Sciences, vol. 4(2), pages 123-130.
    • Handle: RePEc:rss:jnljef:v4i2p6
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    References listed on IDEAS

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    1. Daniel Stavárek & Iveta Řepková, 2012. "Efficiency in the Czech banking industry: A non-parametric approach," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 60(2), pages 357-366.
    2. Alessandro Giustiniani & Kevin Ross, 2008. "Bank Competition and Efficiency in the FYR Macedonia," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 6(2), pages 145-167.
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