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Financial liberalization and banking efficiency: evidence from Turkey

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  • Cevdet Denizer
  • Mustafa Dinc
  • Murat Tarimcilar

Abstract

This paper examines the banking efficiency in a pre- and post-liberalization environment by drawing on the Turkish experience by using DEA. The paper also investigates the scale effect on efficiency. Our findings suggest that liberalization programs were followed by an observable decline in efficiency. Another finding of the study is that the Turkish banking system had a serious scale problem during the study period. The second part of our analysis relied on econometric methods and found that one major reason for such system-wide efficiency decline has been the growing macroeconomic instability of the Turkish economy in general and financial sector in particular. Copyright Springer Science+Business Media, LLC 2007

Suggested Citation

  • Cevdet Denizer & Mustafa Dinc & Murat Tarimcilar, 2007. "Financial liberalization and banking efficiency: evidence from Turkey," Journal of Productivity Analysis, Springer, vol. 27(3), pages 177-195, June.
    • Handle: RePEc:kap:jproda:v:27:y:2007:i:3:p:177-195
    DOI: 10.1007/s11123-007-0035-9
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    More about this item

    Keywords

    Banking; Efficiency; Liberalization; Data envelopment analysis; C14; C61; G21; G28;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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