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Efficiency Measures of the Greek Banking Sector: A Non-Parametric Approach for the Period 1997-1999

Author

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  • Halkos, George
  • Salamouris, Dimitrios

Abstract

This study explores the efficiency of the Greek Banking sector with the use of a number of suggested financial efficiency ratios for the time period 1997-99. A non-parametric analytic technique (Data Envelopment Analysis) is employed for measuring efficiency. The suggested model in our analysis offers an empirical reference set for comparing the inefficient banks with the efficient ones. For each year we estimate the relative efficiency and determine the feasible targets for improvement of each bank. The analysis shows that, the total improvement in efficiency in the Banking sector is mainly attributed to the increase in the efficiency ratio resulting from the significant increase in revenues mainly from their activation in the Greek Stock Exchange Market. We find that the higher the size of total assets the higher the efficiency is. We also show that the increase in efficiency is accompanied with a reduction in the number of small banks due to mergers and acquisitions.

Suggested Citation

  • Halkos, George & Salamouris, Dimitrios, 2001. "Efficiency Measures of the Greek Banking Sector: A Non-Parametric Approach for the Period 1997-1999," MPRA Paper 2858, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:2858
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    References listed on IDEAS

    as
    1. 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.
    2. Rajiv D. Banker & Richard C. Morey, 1986. "Efficiency Analysis for Exogenously Fixed Inputs and Outputs," Operations Research, INFORMS, vol. 34(4), pages 513-521, August.
    3. Ferrier, Gary D. & Lovell, C. A. Knox, 1990. "Measuring cost efficiency in banking : Econometric and linear programming evidence," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 229-245.
    4. Oral, Muhittin & Yolalan, Reha, 1990. "An empirical study on measuring operating efficiency and profitability of bank branches," European Journal of Operational Research, Elsevier, vol. 46(3), pages 282-294, June.
    5. Berg, Sigbjorn Atle & Forsund, Finn R. & Hjalmarsson, Lennart & Suominen, Matti, 1993. "Banking efficiency in the Nordic countries," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 371-388, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Banking; Financial ratios; Data Envelopment Analysis;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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