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Institutional Reforms, EU Accession, and Bank Efficiency: Evidence from Bulgaria

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Author Info

  • Kiril Tochkov

    ()
    (Department of Economics, Texas Christian University)

  • Nikolay Nenovsk

    ()
    (Department of Economics, University of Orleans and ICER)

Abstract

The paper examines the efficiency of Bulgarian banks and its determinants over the period 1999-2007. The levels of technical, allocative, and cost efficiency are estimated using a non-parametric methodology and then regressed upon a number of bank-specific, institutional, and EU-related factors. The findings indicate that foreign banks were more efficient than domestic private banks, although the gap between them narrowed over time. State-owned banks ranked last but their privatization resulted in efficiency gains. Capitalization, liquidity, and enterprise restructuring enhanced bank efficiency, while banking reforms had an adverse effect. The Treaty of Accession and EU membership were associated with significant efficiency improvements.

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File URL: http://www.econ.tcu.edu/RePEc/tcu/wpaper/wp10-02.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by Texas Christian University, Department of Economics in its series Working Papers with number 201005.

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Length: 32 pages
Date of creation: Mar 2010
Date of revision:
Handle: RePEc:tcu:wpaper:201006

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Web page: http://www.econ.tcu.edu/
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Related research

Keywords: Transition economies; Banking; Efficiency; EU accession;

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References

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  1. Michael Berlemann & Nikolay Nenovsky, 2004. "Lending of First versus Lending of Last Resort: The Bulgarian Financial Crisis of 1996/19971," Comparative Economic Studies, Palgrave Macmillan, vol. 46(2), pages 245-271, June.
  2. Roman Matoušek & Anita Taci, 2004. "Efficiency in Banking: Empirical Evidence from the Czech Republic," Economic Change and Restructuring, Springer, vol. 37(3), pages 225-244, 09.
  3. Grigorian, David A. & Manole, Vlad, 2002. "Determinants of commercial bank performance in transition - an application of data envelopment analysis," Policy Research Working Paper Series 2850, The World Bank.
  4. Nikolay Nenovsky & Petar Chobanov & Gergana Mihaylova & Darina Koleva, 2008. "Efficiency of the Bulgarian Banking System: Traditional Approach and Data Envelopment Analysis," Working paper series 12008en, Agency for Economic Analysis and Forecasting.
  5. Daniel Stavárek, 2006. "Banking Efficiency in the Context of European Integration," Eastern European Economics, M.E. Sharpe, Inc., vol. 44(4), pages 5-31, August.
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  13. SIMAR, Léopold & WILSON, Paul, 1995. "Sensitivity Analysis to Efficiency Scores : How to Bootstrap in Nonparametric Frontier Models," CORE Discussion Papers 1995043, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. Kenneth Koford & Adrian E. Tschoegl, 2003. "Foreign banks in Bulgaria, 1875-2002," William Davidson Institute Working Papers Series 537, William Davidson Institute at the University of Michigan.
  15. Dobrinsky, Rumen, 2000. "The Transition Crisis in Bulgaria," Cambridge Journal of Economics, Oxford University Press, vol. 24(5), pages 581-602, September.
  16. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
  17. Kraft, Evan & Tirtiroglu, Dogan, 1998. "Bank Efficiency in Croatia: A Stochastic-Frontier Analysis," Journal of Comparative Economics, Elsevier, vol. 26(2), pages 282-300, June.
  18. Mertens, Alexander & Urga, Giovanni, 2001. "Efficiency, scale and scope economies in the Ukrainian banking sector in 1998," Emerging Markets Review, Elsevier, vol. 2(3), pages 292-308, September.
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