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Efficiency of European banking systems: A correction by environment variables

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Author Info

  • Ana Lozano Vivas

    (Dpto. Economía y Admon. de Empresas)

  • Jesús Tadeo Pastor Ciurana

    (Universidad de Alicante)

  • José Manuel Pastor Monsálvez

    (Instituto Valenciano de Investigaciones Económicas)

Abstract

In this paper we extend the efficiency cross-country comparisons to ten European countries in order to know how different or similar current banking performances are. We start with two types of comparisons. First of all, we evaluate the average technical efficiency of each country by means of a DEA model called "basic" model. This model includes only banking variables. Our second model, called "complete", does consider environmental variables together with the banking variables of the basic model. The empirical results recommended us to substitute the original environmental variables with new codified variables. Finally, the non homogeneity of the country-samples, observed after performing an individual DEA analysis for each country, was decisive for considering two new models, based on a modified sample. The comparisons between the last two models show that the country specific environmental conditions exercise a strong influence over the average efficiency score of each country. El objetivo de este trabajo es comparar la eficiencia de diez países europeos. Para ello, el trabajo comienza con dos tipos de modelos. El primero analiza la eficiencia técnica media de cada país por medio de un modelo DEA que denominamos “modelo básico” y que incluye sólo variables bancarias. El segundo, llamado “modelo completo” incluye variables ambientales junto con las variables bancarias del modelo básico. Los resultados obtenidos en este segundo modelo recomendaron sustituir las variables ambientales originales por unas nuevas variables codificadas. Finalmente, la heterogeneidad de las muestras por países, observada después de realizar un análisis individual por país, lleva a considerar dos nuevos modelos, basados ambos en el modelo codificado. Las comparaciones entre estos dos modelos muestran que las condiciones ambientales de cada país ejercen una influencia muy fuerte en la eficiencia media de cada país.

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File URL: http://www.ivie.es/downloads/docs/wpasec/wpasec-1997-12.pdf
File Function: Fisrt version / Primera version, 1997
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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie EC with number 1997-12.

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Length: 27 pages
Date of creation: Jan 1997
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasec:1997-12

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Related research

Keywords: Eficiencia; DEA; condiciones ambientales; banca europea Efficiency; DEA; environmental conditions; European banking;

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Citations

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Cited by:
  1. Barbara Casu & Philip Molyneux, 2003. "A comparative study of efficiency in European banking," Applied Economics, Taylor & Francis Journals, vol. 35(17), pages 1865-1876.
  2. Mohamed Chaffai & Michel Dietsch & Ana Lozano-Vivas, 2001. "Technological and Environmental Differences in the European Banking Industries," Journal of Financial Services Research, Springer, vol. 19(2), pages 147-162, April.
  3. Jose Pastor & Lorenzo Serrano, 2005. "Efficiency, endogenous and exogenous credit risk in the banking systems of the Euro area," Applied Financial Economics, Taylor & Francis Journals, vol. 15(9), pages 631-649.
  4. Brissimis, Sophocles N. & Delis, Manthos D. & Tsionas, Efthymios G., 2010. "Technical and allocative efficiency in European banking," European Journal of Operational Research, Elsevier, vol. 204(1), pages 153-163, July.
  5. Jose Pastor, 2002. "Credit risk and efficiency in the European banking system: A three-stage analysis," Applied Financial Economics, Taylor & Francis Journals, vol. 12(12), pages 895-911.
  6. Daniel Stavarek, 2005. "Efficiency of Banks in Regions at Different Stage of European Integration Process," Finance 0502020, EconWPA.

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