Evaluating Bank Efficiency in the West Balkan Countries Using Data Envelopment Analysis

Abstract

The financial systems of the West Balkan countries are mainly based on banks. For an efficient financial system, it is of immense importance that the banks operating in it do so with high levels of efficiency. Furthermore, efficiency is needed when it comes to involving banking institutions in the financial flows in order to maintain sustainability of the financial construction. The aim of this paper is to determine whether there is a difference in efficiency between the considered countries and thus to show which changes the decisionmakers have to make in order to improve the efficiency of their banking systems. We analyze data from the revised financial statements of all banks operating in Albania, Bosnia and Herzegovina, Montenegro, North Macedonia and Serbia for the period from 2015 to 2019, using loans and investment as input variables and interest income, non-interest income and net income as output variables. The results obtained from the output-oriented DEA model with a variable return to scale have shown higher efficiency levels in North Macedonia, Bosnia and Herzegovina and Montenegro, while Serbia and Albania show lower efficiency. The individual analyses have shown that in order to improve efficiency levels, improvement is needed more in the correction of the investment amounts then in loan placements.

Assessment of cost efficiency in the banking sector of selected countries in Southeastern Europe

“…The country with the highest efficiency is North Macedonia with 83.04%, while Serbia has the lowest efficiency of 76.30%. Serbia also had the lowest efficiency in the paper conducted by Horvat et al (2022) with the countries of SEE during 2015SEE during -2019 This section of the study focuses on the findings made possible by using certain panel data analysis techniques to pinpoint the factors that affect the financial performance of the Southeastern European financial sector. The outcomes of the fixed effects model are displayed in Table 4.…”

Beyond Boundaries: The AHP-DEA Model for Holistic Cross-Banking Operational Risk Assessment

“…These importance values are endogenously determined by the DEA model, avoiding the subjectivity and arbitrariness associated with the manual determination of importance values. Currently, DEA is widely applied for efficiency and performance assessment in various fields, including banking [41,42], public policy [43], and economics and finance [44,45]. In addition, DEA is also used in preference voting systems to determine the most favorable importance values for each candidate object.…”

Komparasi Efisiensi Bank Umum Konvensional Pemerintah dan Bank Umum Konvensional Swasta dengan Pendekatan Data Envelopment Analysis

“…Terdapat beberapa output penting yang dapat membantu analisis input maupun output yang menyebabkan kondisi inefisien, yaitu: (1) Projection adalah besaran input serta output yang semestinya supaya bank dapat beroperasi efisien (Novandra, 2014;Ruiz & Sirvent, 2022); (2) Slack movement yaitu jumlah output yang bisa ditambah maupun jumlah input yang bisa dikurangi diluar proportionate movement sebab terdapat over input (Feng et al, 2022); serta, (3) Proportionate movement yaitu jumlah input yang bisa dikurangi dengan kondisi menjaga tingkat output tetap (Horvat et al, 2022) Pada Tabel 5 disajikan hasil output inefisiensi untuk aset tetap. Berdasarkan tabel tersebut dapat diketahui pada tahun 2021, PT.…”