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Estimating and analyzing the efficiency and productivity of bank branches: Evidence from Greece

Chrysovalantis Gaganis (), Aggeliki Liadaki, Michael Doumpos and Constantin Zopounidis

Managerial Finance, 2009, vol. 35, issue 2, 202-218

Abstract: Purpose - The purpose of this paper is to examine the efficiency and productivity of a Greek bank's branches. Design/methodology/approach - The sample consists of 458 branches of a Greek commercial bank, operating in 13 regions of Greece over the period 2002-2005, a total of 1,795 observations. Data envelopment analysis was used to explore the efficiency and productivity of the branches. Then, fixed and random effects models were used to determine the impact of internal and external factors on the efficiency and productivity scores. Findings - The results indicate that the branches in the sample could have achieved improved overall performance during 2002-2005. Also, that the inclusion of loan loss provisions as an input variable increases the efficiency score, but for the total factor productivity (TFP) change, the results are mixed. The second stage regressions indicate that both the logarithm of personnel and the logarithm of income per capita in the local market have a significant impact on efficiency, while the loans to total assets ratio has a significant impact on pure technical efficiency only. When the various productivity change measures were regressed over the explanatory variables, it was found that the logarithm of per capita gross fixed capital formation has a positive and statistically significant impact on all measures. Also, that the return on assets, the loans to deposit ratio, the logarithm of personnel, and the logarithm of income of per capita, all have a positive and statistically significant impact on overall efficiency change. Originality/value - This paper is the first study on Greek branches which examines the impact of market conditions. It examines the impact of risk-taking on the efficiency of the branches and examines the productivity growth of the branch network using the Malmquist TFP index.

Keywords: Banks; Greece; Data analysis; Commercial banks (search for similar items in EconPapers)
Date: 2009
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