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Productivity, technology and efficiency of de novo banks: A counter evidence from Turkey

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  • Isik, Ihsan

Abstract

Employing a non-parametric frontier method, we investigate the technical X-efficiency and productivity growth of de novo banks vis-à-vis established banks in Turkey. The purpose of the paper is to study the performance pattern of de novo banks upon establishment. Overall results suggest that de novo banks tend to outperform established banks in all aspects of productive efficiency. Productivity, technology and efficiency also tend to grow faster in de novo banks than in established banks. Most of these performance improvements, however, take place in early years. As these banks approach the age of 10, diseconomies of scale issues begin to emerge, implying that economies of scale opportunities from expanding production scales are quite limited in the Turkish banking market. We also found that foreign entries are not only more efficient but also register faster productivity growth than domestic entries, suggesting that banking authorities, especially in emerging markets, may use foreign entries to boost the efficiency performance of their banks.

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  • Isik, Ihsan, 2008. "Productivity, technology and efficiency of de novo banks: A counter evidence from Turkey," Journal of Multinational Financial Management, Elsevier, vol. 18(5), pages 427-442, December.
  • Handle: RePEc:eee:mulfin:v:18:y:2008:i:5:p:427-442
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    References listed on IDEAS

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    Cited by:

    1. Rachele Anna Ambrosio & Paolo Coccorese, 2015. "Bad Loans and De Novo Banks: Evidence From Italy," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 44(1), pages 101-122, February.
    2. Aiello, Francesco & Bonanno, Graziella, 2014. "On the Sources of Heterogeneity in Banking Efficiency Literature," MPRA Paper 58591, University Library of Munich, Germany.
    3. Francesco Aiello & Graziella Bonanno, 2016. "Efficiency in banking: a meta-regression analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 112-149, January.
    4. Wanke, Peter & Maredza, Andrew & Gupta, Rangan, 2017. "Merger and acquisitions in South African banking: A network DEA model," Research in International Business and Finance, Elsevier, vol. 41(C), pages 362-376.
    5. Sufian, Fadzlan, 2011. "Banks total factor productivity change in a developing economy: Does ownership and origins matter?," Journal of Asian Economics, Elsevier, vol. 22(1), pages 84-98, February.
    6. Aysan, Ahmet Faruk & Ertek, Gurdal & Ozturk, Secil, 2009. "Assessing the adverse effects of interbank funds on bank efficiency through using semiparametric and nonparametric methods," MPRA Paper 38113, University Library of Munich, Germany.
    7. Fethi, Meryem Duygun & Pasiouras, Fotios, 2010. "Assessing bank efficiency and performance with operational research and artificial intelligence techniques: A survey," European Journal of Operational Research, Elsevier, vol. 204(2), pages 189-198, July.
    8. Kyj, Larissa & Isik, Ihsan, 2008. "Bank x-efficiency in Ukraine: An analysis of service characteristics and ownership," Journal of Economics and Business, Elsevier, vol. 60(4), pages 369-393.
    9. repec:eee:quaeco:v:64:y:2017:i:c:p:120-129 is not listed on IDEAS
    10. repec:eee:quaeco:v:66:y:2017:i:c:p:70-99 is not listed on IDEAS
    11. Demirbag, Mehmet & McGuinness, Martina & Akin, Ahmet & Bayyurt, Nizamettin & Basti, Eyup, 2016. "The professional service firm (PSF) in a globalised economy: A study of the efficiency of securities firms in an emerging market," International Business Review, Elsevier, vol. 25(5), pages 1089-1102.

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