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Evolution of banking efficiency within an unstable macroeconomic environment: the case of Turkish commercial banks

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  • Canan Yildirim
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    Abstract

    This paper analyses the efficiency performance of the Turkish banking sector between 1988 and 1999, a period characterized by increasing macroeconomic instability. The technical and scale efficiencies of Turkish commercial banks are measured with the use of nonparametric Data Envelopment Analysis. The empirical results suggest that over the sample period both pure technical and scale efficiency measures show a great variation and the sector did not achieve sustained efficiency gains. It is also reported that the sector suffers mainly from scale inefficiency and scale inefficiency, in turn, is due to decreasing returns to scale. There are also reported differences in the efficiency performance of commercial banks with different ownership status. In addition, the relationships between profitability, asset quality, size and the two definitions of efficiency are considered. Efficient banks are more profitable, and pure technical efficiency and scale inefficiency are positively related to size. The trend in the performance levels over the period suggests that macroeconomic conditions had a profound influence on the efficiency measures.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Applied Economics.

    Volume (Year): 34 (2002)
    Issue (Month): 18 ()
    Pages: 2289-2301

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    Handle: RePEc:taf:applec:v:34:y:2002:i:18:p:2289-2301

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    Cited by:
    1. Ariff, Mohamed & Can, Luc, 2008. "Cost and profit efficiency of Chinese banks: A non-parametric analysis," China Economic Review, Elsevier, vol. 19(2), pages 260-273, June.
    2. Aysan, Ahmet Faruk & Ceyhan, Sanli Pinar, 2007. "Market Disciplining Role of Crisis on the Restructuring of the Turkish Banking Sector," MPRA Paper 5492, University Library of Munich, Germany.
    3. Anastasia Koutsomanoli-Filippaki & Emmanuel Mamatzakis, 2009. "Performance and Merton-Type Default Risk of Listed Banks in EU: a panel VAR approach," Discussion Paper Series 2009_09, Department of Economics, University of Macedonia, revised Apr 2009.
    4. Fukuyama, Hirofumi & Matousek, Roman, 2011. "Efficiency of Turkish banking: Two-stage network system. Variable returns to scale model," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 21(1), pages 75-91, February.
    5. Reichmann, Gerhard & Sommersguter-Reichmann, Margit, 2006. "University library benchmarking: An international comparison using DEA," International Journal of Production Economics, Elsevier, vol. 100(1), pages 131-147, March.
    6. Yin, Haiyan & Yang, Jiawen & Mehran, Jamshid, 2013. "An empirical study of bank efficiency in China after WTO accession," Global Finance Journal, Elsevier, vol. 24(2), pages 153-170.
    7. Ahmet Faruk Aysan & Sanli Pinar Ceyhan, 2007. "What Determines the Banking Sector Performance in Globalized Financial Markets: The Case of Turkey?," Working Papers 2007/21, Bogazici University, Department of Economics.
    8. Aysan, Ahmet Faruk & Ceyhan, Sanli Pinar, 2008. "Structural Change and the Efficiency of Banking In Turkey: Does Ownership Matter?," MPRA Paper 17849, University Library of Munich, Germany.

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