Banks and Insurance Companies Efficiency Indicators in the Period of Financial Crisis: The Case of the Republic of Croatia

The main goal of the paper is to identify and to compare the efficiency measurement results of banks and insurance companies using Data Envelopment Analysis (DEA) and accounting indicators in the period before and after the onset of recent financial and economic crises in the Republic of Croatia. This research is important because it observes and compares the results of those two efficiency measurement methods which former researches did not encompass. The research includes the banking industry and the insurance sector in the Republic of Croatia due to their relatively high asset share of about 83% in total financial sector asset. The main difference in results between DEA approach and accounting approach was remarked in sense of accounting approach efficiency measurement scores lag in the crisis period. DEA efficiency scores had the lowest values in the year 2007 for insurance industry and for banks in 2008 but with visible lower values already in 2007. The lowest ROA and ROE accounting ratios in the year 2009 could be explained by the fact that although financial institutions operate more efficiently in the crisis period in sense of expense and income results, accounting ratios cannot achieve as good scores as in period of a boom, due to the deteriorated market conditions, and more reserved business policy.