Evaluating the European bank efficiency using Data Envelopment Analysis: evidence in the aftermath of the recent financial crisis

Candida Ferreira

No 2019/0109, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: This paper seeks to contribute to the analysis of the bank efficiency in the European Union in the aftermath of the recent crisis, using Data Envelopment Analysis (DEA) and considering a sample of 485 banks from all current EU member-states between 2011 and 2017. The results obtained confirm the existence of bank inefficiency,and that this inefficiency is mostly due to inefficient managerial performance and bad combinations of the considered bank inputs and outputs. The results also provide enough evidence of appropriate scale production and dynamic technological changes during the considered interval. Moreover, the results obtained using panel estimates to explain the bank total factor productivity changes allow us to conclude that the choices of the banks in terms of the fixed assets,the profit before tax to the average assets, as well as the ratio of the off-balance sheet items to total assets contribute positively to the productivity changes. On the other side, the ratio of the impaired loans to equity, and the bank interest margins are not in line with the total factor productivity changes of the EU banking sector.

Keywords: EU banking sector; bank efficiency; Data Envelopment Analysis; Malmquist Index (search for similar items in EconPapers)
JEL-codes: C33 D24 F36 G21 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-ban, nep-eec, nep-eff and nep-eur
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Related works:
Journal Article: Evaluating European Bank Efficiency Using Data Envelopment Analysis: Evidence in the Aftermath of the Recent Financial Crisis (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp01092019

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