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Evolution of Bank Efficiency in Brazil: A DEA Approach

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  • Roberta B. Staub
  • Geraldo Souza
  • Benjamin M. Tabak

Abstract

This paper investigates cost, technical and allocative efficiency for Brazilian banks in the recent period (2000-2007). The empirical results imply that non-performing loans is an important indicator of efficiency level, as well as market share. Evidence is in favor of the home field advantage hypothesis since foreign banks are less cost efficient than their domestic counterparts. Furthermore, the agency theory hypothesis is not accepted as state-owned banks are more cost efficient than private banks. This could be due to: 1. the number of state-owned banks was reduced in the last years and only more efficient banks are left in the Brazilian banking system, and 2. state-owned banks hold very large public servants payroll accounts and therefore have an important advantage. Further research could exploit profit efficiency as private banks may have higher profit efficiency.

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File URL: http://www.bcb.gov.br/pec/wps/ingl/wps200.pdf
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Bibliographic Info

Paper provided by Central Bank of Brazil, Research Department in its series Working Papers Series with number 200.

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Date of creation: Dec 2009
Date of revision:
Handle: RePEc:bcb:wpaper:200

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Web page: http://www.bcb.gov.br/?english

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Cited by:
  1. Benjamin M. Tabak & Dimas M. Fazio & Daniel O. Cajueiro, 2010. "The Effects of Loan Portfolio Concentration on Brazilian Banks' Return and Risk," Working Papers Series 215, Central Bank of Brazil, Research Department.
  2. Vazquez, Francisco & Tabak, Benjamin M. & Souto, Marcos, 2012. "A macro stress test model of credit risk for the Brazilian banking sector," Journal of Financial Stability, Elsevier, vol. 8(2), pages 69-83.
  3. Yong Li & Mancang Wang, 2012. "Capital regulation, monetary policy and asymmetric effects of commercial banks' efficiency," China Finance Review International, Emerald Group Publishing, vol. 2(1), pages 5-26, February.
  4. Simplice Anutechia Asongu, 2012. "Bank Efficiency and Openness in Africa: Do Income Levels Matter?," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 4(2), pages 115-122, December.
  5. Huang, Wei & Eling, Martin, 2013. "An efficiency comparison of the non-life insurance industry in the BRIC countries," European Journal of Operational Research, Elsevier, vol. 226(3), pages 577-591.
  6. Miguel SARMIENTOÕ & Andrés CEPEDA & Hernando MUTIS & Juan F. PÉREZ, 2013. "Nueva Evidencia sobre la Eficiencia de la Banca," ARCHIVOS DE ECONOMÍA 010705, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
  7. Ippoliti, Roberto & Falavigna, Greta, 2012. "Efficiency of the medical care industry: Evidence from the Italian regional system," European Journal of Operational Research, Elsevier, vol. 217(3), pages 643-652.
  8. Benjamin M. Tabak & Giovana L. Craveiro & Daniel O. Cajueiro, 2011. "Bank Efficiency and Default in Brazil: Causality Tests," Working Papers Series 253, Central Bank of Brazil, Research Department.
  9. Zhang, Jianhua & Jiang, Chunxia & Qu, Baozhi & Wang, Peng, 2013. "Market concentration, risk-taking, and bank performance: Evidence from emerging economies," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 149-157.
  10. E. Nur Ozkan Gunay, 2012. "Risk Incorporation and Efficiency in Emerging Market Banks During the Global Crisis: Evidence from Turkey, 2002-2009," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 48(S5), pages 91-102, November.
  11. Asongu Simplice, 2011. "Globalization, Financial Development and Regional Economic Dynamics: asymmetric panel evidence from Africa," Working Papers 11/008, African Governance and Development Institute..
  12. Alperovych, Yan & Amess, Kevin & Wright, Mike, 2013. "Private equity firm experience and buyout vendor source: What is their impact on efficiency?," European Journal of Operational Research, Elsevier, vol. 228(3), pages 601-611.
  13. Benjamin M. Tabak & Daniel O. Cajueiro & Marina V. B. Dias, 2014. "The Adequacy of Deterministic and Parametric Frontiers to Analyze the Efficiency of Indian Commercial Banks," Working Papers Series 350, Central Bank of Brazil, Research Department.
  14. Simplice A., Asongu, 2011. "Globalization, financial allocation efficiency and regional economic dynamics: asymmetric panel evidence from Africa," MPRA Paper 33901, University Library of Munich, Germany.
  15. Barros, Carlos Pestana & Wanke, Peter, 2014. "Banking efficiency in Brazil," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 28(C), pages 54-65.

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