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Banking Efficiency During the Financial Crisis Period

Author

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  • Adnan Kasman

Abstract

This paper examines the performance of banks in the Turkish banking system over the period 2001-2002. The goal of the analysis is to quantify the impact of restructuring program on the banking efficiency. Using the stochastic frontier approach, efficiency scores were estimated for each bank in the sample. The results indicate that the mean cost efficiency improved significantly between 2001 and 2002. The results also indicate that private banks are the most cost efficient in 2002. There is evidence that large banks operate more cost efficiently and furthermore, there is a substantial difference in scale economies between small and large banks. Large banks show significant diseconomies of scale while small ones show significant scale economies.

Suggested Citation

  • Adnan Kasman, 2003. "Banking Efficiency During the Financial Crisis Period," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 7(25-26), pages 65-82.
    • Handle: RePEc:bor:iserev:v:7:y:2003:i:25-26:p:65-82
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    File URL: http://www.borsaistanbul.com/datum/imkbdergi/EN/ISE_Review_25-26.pdf
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    References listed on IDEAS

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    1. Allen, Linda & Rai, Anoop, 1996. "Operational efficiency in banking: An international comparison," Journal of Banking & Finance, Elsevier, vol. 20(4), pages 655-672, May.
    2. Altunbas, Yener & Liu, Ming-Hau & Molyneux, Philip & Seth, Rama, 2000. "Efficiency and risk in Japanese banking," Journal of Banking & Finance, Elsevier, vol. 24(10), pages 1605-1628, October.
    3. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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    Cited by:

    1. Saadet Kasman & Adnan Kasman, 2011. "Efficiency, Productivity and Stock Performance: Evidence from the Turkish Banking Sector," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(3), pages 355-372, September.
    2. Adnan Kasman & Kamila Mekenbayeva, 2016. "Technical Efficiency and Total Factor Productivity in the Kazakh Banking Industry," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 66(4), pages 685-709, December.

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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