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Efficiency in the Slovak Banking Industry: A Comparison of Three Approaches

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  • Martin Boďa
  • Emília Zimková

Abstract

The paper emphasizes that any approach to defining technical efficiency in banking is just a different outlook on manifold goals and functions that commercial banks pursue. Three commonly applied approaches, i.e. the service-oriented approach, the intermediation approach and the profitoriented approach, are not in conflict but are complementary in providing information on how commercial banks perform in financial intermediation, provision of banking services and profit seeking. In addition to the methodological contribution of the paper, it investigates the efficiency of the Slovak banking industry over the years 2000-2011 so as to find whether employment of a specific approach changes the view on efficiency of individual commercial banks. To this end, the non-parametric method of evaluation is employed based on the slack-based measure model of data envelopment analysis. The results suggest that general impressions of the efficiency status of individual banks as obtained within the three approaches are similar in most cases.

Suggested Citation

  • Martin Boďa & Emília Zimková, 2015. "Efficiency in the Slovak Banking Industry: A Comparison of Three Approaches," Prague Economic Papers, Prague University of Economics and Business, vol. 2015(4), pages 434-451.
    • Handle: RePEc:prg:jnlpep:v:2015:y:2015:i:4:id:546:p:434-451
    DOI: 10.18267/j.pep.546
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    References listed on IDEAS

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    1. 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.
    2. Karligash Kenjegalieva & Richard Simper & Thomas Weyman-Jones, 2009. "Efficiency of transition banks: inter-country banking industry trends," Applied Financial Economics, Taylor & Francis Journals, vol. 19(19), pages 1531-1546.
    3. Tone, Kaoru, 2001. "A slacks-based measure of efficiency in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 130(3), pages 498-509, May.
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    Citations

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    Cited by:

    1. Iveta Palečková, 2019. "Cost Efficiency Measurement Using Two-Stage Data Envelopment Analysis in the Czech and Slovak Banking Sectors," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 69(3), pages 445-466, September.
    2. Ivan Gržeta & Saša Žiković & Ivana Tomas Žiković, 2023. "Size matters: analyzing bank profitability and efficiency under the Basel III framework," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-28, December.

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    More about this item

    Keywords

    efficiency; the Slovak banking industry; SBM model; the intermediation approach; the service-oriented approach; the profit-oriented approach;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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