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Efficiency of the building societies in the Czech Republic

Author

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  • Lukáš Leksovský

    (Katedra financí, Obchodně podnikatelská fakulta, Slezská univerzita Opava, Univerzitní nám. 1934/3, 733 40 Karviná, Česká republika)

  • Daniel Stavárek

    (Katedra financí, Obchodně podnikatelská fakulta, Slezská univerzita Opava, Univerzitní nám. 1934/3, 733 40 Karviná, Česká republika)

Abstract

This paper is the first attempt to analyze efficiency of building societies in the Czech Republic. We apply non-parametric method Data Envelopment Analysis on data from all building societies in the sector over the period 2002-2008. Having deposits received and administrative expenses as inputs and volume of loans disbursed as output we estimate efficiency scores of all individual building societies as well as calculate the average efficiency in the industry. For this purpose we use two alternative models that allows for constant and variable returns of scale respectively. The results suggest that there is no significant improvement in efficiency of building societies during the estimation period. Furthermore, most of the building societies have not been operating at appropriate size. We also found that Českomoravská stavební spořitelna, a. s. was the most efficient building society in the Czech Republic according to the both models applied. In order to increase efficiency, we suggest reduction in the number of external employees and agents or increase of their productivity, more sophisticated products that can outperform the standard services and effective response to changes in the legislature.

Suggested Citation

  • Lukáš Leksovský & Daniel Stavárek, 2011. "Efficiency of the building societies in the Czech Republic," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 59(4), pages 143-150.
    • Handle: RePEc:mup:actaun:actaun_2011059040143
    DOI: 10.11118/actaun201159040143
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    References listed on IDEAS

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    1. Andrew Worthington, 1998. "Efficiency in Australian building societies: an econometric cost function approach," Applied Financial Economics, Taylor & Francis Journals, vol. 8(5), pages 459-467.
    2. Ray,Subhash C., 2012. "Data Envelopment Analysis," Cambridge Books, Cambridge University Press, number 9781107405264.
    3. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    4. Sealey, Calvin W, Jr & Lindley, James T, 1977. "Inputs, Outputs, and a Theory of Production and Cost at Depository Financial Institutions," Journal of Finance, American Finance Association, vol. 32(4), pages 1251-1266, September.
    5. William W. Cooper & Lawrence M. Seiford & Kaoru Tone, 2007. "Data Envelopment Analysis," Springer Books, Springer, edition 0, number 978-0-387-45283-8, November.
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