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Efficiency Estimation of Commercial Banks Based on Financial Performance: Input Oriented DEA CRS/VRS Models

Author

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  • Marjanović Ivana

    (PhD student at the Faculty of Economics, University of Niš, Republic of Serbia)

  • Stanković Jelena J.

    (Faculty of Economics, University of Niš, Republic of Serbia)

  • Popović Žarko

    (Faculty of Economics, University of Niš, Republic of Serbia)

Abstract

Measurement and evaluation of the bank’s operations efficiency requires analytical techniques that provide data beyond those available from the standard analysis of financial statements. The Data Envelopment Analysis (DEA) is a mathematical programming technique that offers valuable insights in finding inefficient banks taking into account the scope of the services and resources used to provide these banking services. The results of the DEA analysis can provide significant information to the bank’s management that can supplement the information obtained using traditional techniques for assessing efficiency. The assessment of banks’ efficiency in the Republic of Serbia is of particular importance due to intense competition and implemented banking reforms. Therefore, in this paper DEA analysis will be applied for the examination and assessment of the efficiency of the operations of Serbian banks during the period 2014-2016. The analysis will show which of the banks operates efficiently, where the efficiency of the banks is not at a satisfactory level, as well as the potential reasons for inefficiency.

Suggested Citation

  • Marjanović Ivana & Stanković Jelena J. & Popović Žarko, 2018. "Efficiency Estimation of Commercial Banks Based on Financial Performance: Input Oriented DEA CRS/VRS Models," Economic Themes, Sciendo, vol. 56(2), pages 239-252, June.
    • Handle: RePEc:vrs:ecothe:v:56:y:2018:i:2:p:239-252:n:6
    DOI: 10.2478/ethemes-2018-0014
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    References listed on IDEAS

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    More about this item

    Keywords

    Banks; efficiency; Data Envelopment Analysis; ratio analysis;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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