An International Comparison of Banking Sectors: A DEA Approach

Cesar Oliveira and Benjamin Tabak

Global Economic Review, 2005, vol. 34, issue 3, 291-307

Abstract: This paper presents a novel approach to measure and compare the efficiency of the banking system in several countries and stages of development using the non-parametric mathematic methodology Data Envelopment Analysis (DEA). Thus, we expect to broaden the range of studies about banking efficiency. Differently from most studies that use accounting data for measuring efficiency we employed market data, measuring returns and risk (calculated in different ways) in order to build a new measure of efficiency. This approach allows the comparison of different countries, which have different accounting rules and are not comparable using standard models. The main results suggest a downward trend in the average efficiency level of developed countries and a slight upward trend in the efficiency level of emerging market countries during the period. According to this study, efficiency tends to level off emerging and developed countries. It may be partially explained by the increasing globalization and integration processes that markets have been going through in the last years.

Keywords: banking efficiency; DEA; risk; stock profitability; market data (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (3)

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DOI: 10.1080/12265080500292633

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