MEASURING THE EFFICIENCY IN THE ROMANIAN BANKING SYSTEM THROUGH THE METHOD OF THE DATA ENVELOPMENT ANALYSIS (DEA)

Alina Georgiana Manta and Roxana Maria Badîrcea
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Alina Georgiana Manta: University of Craiova Faculty of Economics and Business Administration
Roxana Maria Badîrcea: University of Craiova Faculty of Economics and Business Administration

Annals of University of Craiova - Economic Sciences Series, 2014, vol. 1, issue 42, 23-34

Abstract: The purpose of this paper is to reveal an alternative method of measuring the banking performance through the banking efficiency. In order to estimate the banking efficiency we have applied the Data Envelopment Analysis – DEA technique. In the analysis we made, we have used the approach of the banking intermediation which supposes that the banks intermediate the funds between the deponents and the debtors with the lowest costs. Therefore, the inputs we will use are: the expenses with the personnel and the expenses with the interests, the outputs: the investments and the credits and the prices of the inputs: the expenses with the personnel reported to the number of employees and the expenses with the interests reported to the volume of the deposits. For the estimation of the DEA model we used the data taken from the financial reports of 11 most important banks in Romania for 2008 – 2011. The data were processed in the DEAP 2.1. program. Therefore, the obtained results can be materialized in the following directions: most of the banks in Romania are inefficient from the cost management perspective; during the crisis, the foreign banks proved to be more inefficient than the local ones on the background of the propagation of the negative effects from the parent-banks; in the case of the smaller banks, one states that they are more efficient than the greater banks because of the fact that the totality of the expenses with the interests and of the expenses with the personnel has not been correlated with the volume of the granted loans and of the investments and because of holding a greater volume of nonperforming loans.

Keywords: crisis; efficiency; banking system; estimation; data envelopment analysis (search for similar items in EconPapers)
JEL-codes: G01 G17 G21 G24 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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