The Impact of COVID-19 on Bank Efficiency in the Western Balkans: A DEA Approach

Čiković Katerina Fotova (), Cvetkoska Violeta () and Keček Damira ()
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Čiković Katerina Fotova: University North, Trg dr. Žarka Dolinara 1, 48000 Koprivnica, Croatia
Cvetkoska Violeta: Ss. Cyril and Methodius University in Skopje, Faculty of Economics Skopje, Blvd. Goce Delchev 9 V, 1000 Skopje, North Macedonia
Keček Damira: University North, Trg dr. Žarka Dolinara 1, 48000 Koprivnica, Croatia

Naše gospodarstvo/Our economy, 2023, vol. 69, issue 1, 29-42

Abstract: This paper aims to assess and compare the relative efficiency of commercial banks in six Western Balkan developing countries (North Macedonia, Serbia, Montenegro, Bosnia and Herzegovina (B&H), Kosovo1, and Albania), using the leading nonparametric methodology Data Envelopment Analysis (DEA) for the period 2016-2020, and investigating the impact of the COVID-19 pandemics on the performance of banking systems in these countries. The output-oriented DEA model has been implemented with interest expenses and non-interest expenses as inputs and interest revenue and non-interest revenue as outputs. Our findings show that the average efficiency of the six Western Balkan banking systems differs, and Kosovo’s banking system has noted the highest average efficiency in the whole observed period (2016–2020). In contrast, the banking system in Bosnia and Herzegovina noted the lowest average efficiency. The COVID-19 pandemic decreased the relative efficiency of the banking sectors in all six of the Western Balkan countries observed, except Kosovo. However, additional research that includes all pandemic years is recommended to assess the impact of the COVID-19 pandemic on the banking systems in the Western Balkans. This study provides invaluable insights for academic members, banking management and regulatory bodies, governments, and the interested public. It is the first empirical study that includes a glimpse of the first impact of the COVID-19 pandemic on banking systems in the developing countries of the Western Balkans.

Keywords: Banking sector; Data envelopment analysis; COVID-19; Western Balkans; bančni sektor; analiza ovojnice podatkov; COVID-19; Zahodni Balkan (search for similar items in EconPapers)
JEL-codes: C67 G21 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ngooec:v:69:y:2023:i:1:p:29-42:n:1

DOI: 10.2478/ngoe-2023-0004

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