Risk-Based Directional Distance Function Approach in Evaluating Bank Performance

Özge Sezgin Alp and Adalet Hazar
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Özge Sezgin Alp: Başkent University
Adalet Hazar: Başkent University

Journal of Finance Letters (Maliye ve Finans Yazıları), 2015, vol. 30, issue 103, 157-174

Abstract: In banking sector, especially with the increased competition in recent years, it becomes very important to work efficiently with available resources. Therefore, in this study it is aimed to evaluate the efficiency of Turkish commercial banks with directional distan¬ce function approach which allows evaluating the efficiency with main outputs such as portfolio investments and loans together with undesired outputs such as credit risk and market risk. The results show that while evaluating the banks efficiency just taking into ac¬count the desired outputs may be misleading and while evaluating how they manage their risk levels is also important.

Keywords: banking; efficiency; risk; directional distance function (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:acc:malfin:v:30:y:2015:i:103:p:157-174

DOI: 10.33203/mfy.307960

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