Managerial Behavior and Cost/Profit Efficiency in the Banking Sectors of Central and Eastern European Countries

Rossi, Stefania Patrizia Sonia; Schwaiger, Markus S.; Winkler, Gerhard

doi:10.2139/ssrn.676365

Cited by 52 publications

(46 citation statements)

References 31 publications

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“…The DEA compares each banking sector/bank/branch in the sample with the best practice in the sample, whereby it distinguishes between the efficient 3 Gavurová (2011Gavurová ( , 2012; Šoltés -Gavurová (2013). 4 Rossi et al (2005); Karim et al (2010), who used them to measure efficiency in the European and Malaysian banking sectors. Hartman -Storbeck (1996); Resti (1996); Zago -Dongili (2006); Dai (2010);Cinar (2011);Tabak et al (2011).…”

Section: Methodsmentioning

confidence: 99%

“…NPLs are one of the major causes of economic stagnation problems and can lead to efficiency problems of banks and the banking sector. According to Berger -DeYoung (1997), Williams (2004) and Rossi et al (2005), we approach the matter in a direct way by linking managerial behaviour with the bank's efficiency. In this paper, we used regression analysis to examine how major structural characteristics of banks affect the efficiency of banks' lending behaviour.…”

Section: Acta Oeconomica 65 (2015)mentioning

confidence: 99%

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Loan efficiency in the Visegrad countries

Kočišová

2015

Acta Oeconomica

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Financial markets in the Visegrad countries have undergone several changes in lending business over the past decade. This study evaluates the effi ciency of the largest commercial banks by focusing on their lending decisions using Data Envelopment Analysis. First, we defi ne the concept of effi ciency, then we analyse loan effi ciency between 2007 and 2013. The results indicate that average effi ciency declined. When we studied the loan effi ciency in each country separately, we found that Hungarian banks had the lowest effi ciency while the highest effi ciency was achieved mainly by Czech banks. The results of the study also suggest that effi ciency is positively related to profi tability and capital adequacy, and negatively related to the share of non-performing loans, which confi rms the bad management hypothesis. INTRODUCTIONOver the past decade, financial markets in the Visegrad countries (V4) have undergone several changes that have significantly affected the performance of their banks. One of the consequences of the global financial crisis was the growth of non-performing loans (NPL) and the growth of their share on total gross loans. For example, the average share of NPL in banks, covered by this paper, rose from 5 to 10% between 2007 and 2013. The subject of NPLs has attracted more attention in recent years. Several studies examined bank failures and found that assets quality was an indicator of insolvency (Demirgüç-Kunt 1989; Barr -Siems 1994) since banks had a high level of NPLs before bankruptcy. These authors found that when the volume of bad loans increased, the banks' ability to increase their performance declined. Besides NPLs, one important aspect in the measurement of bank performance is efficiency. This affects the stability of the banking industry and thus the efficiency of the entire financial system. Banking sectors are still the primary form of financial intermediation in the V4 1 countries, being the major channel for the mobilisation of domestic savings and their transformation into a major source of external capital to firms. Banks are key players in the payment systems; therefore, the development of the banking sector's efficiency is crucial for the growth of economies in the V4 countries.According to Resti (1996), at the macroeconomic level, bank efficiency represents a socially optimal objective. It reduces the costs of financial intermediation, the transfer of funds from savers to producers. Consequently, central banks are seriously interested in the accomplishment of operating practices and market equilibrium that grant the maximum productive efficiency, provided that this does not result in a monopoly, which would expropriate consumers from the advantages due to the reduction in average costs. Of course, given some crisis situations, it may be optimal to postpone the search for efficiency, concentrating on the defence of the system stability and preventing dangerous "domino effects" that can arise, when the less productive institutions are forced to quit the market in a traumatic...

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Section: Methodsmentioning

confidence: 99%

Section: Acta Oeconomica 65 (2015)mentioning

confidence: 99%

Loan efficiency in the Visegrad countries

Kočišová

2015

Acta Oeconomica

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“…Studies based upon economies of scale theory argued that size has a positive effect on performance by inducing economies of scale, reflected by the fact that large firms take the advantage of economies of scale in reducing the costs of operations (Bashir, 1999;Said, 2012). Rossi et al (2005) found that larger banks have better performance and better control on the cost side and are more capable of exploiting economies of scale. Muritala (2012) found that firm size is positively related to a firm's performance.…”

Section: Firm Size and Performancementioning

confidence: 99%

The Relationship between Capital Structure and Performance in Gulf Countries Banks: A Comparative Study between Islamic Banks and Conventional Banks

Meero¹

2015

IJEF

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This paper mainly has two objectives: the first one is to identify the similarity of capital structure between Islamic and Conventional banks; Second objective is to detect the relationship between capital structure variables and performance of Islamic and Conventional Banks in Gulf Countries (GC). This investigation has been performed on a sample of 16 GC Banks (8 Islamic Banks and 8 Conventional Banks) for the period 2005-2014. ROE (return on equity) and ROA (return of asset) have been used as performance measures. Total debt to total assets, Equity to total assets, Debt to equity ratios have been used as capital structure measures. Size of the bank has been considered as dependent variable to identify its relationship with bank performance. Data collected were analyzed by using SPSS software. The results of the research indicate a similarity of capital structure of Islamic banks and Conventional banks in Gulf Countries. ROA as performance measurement has a significant negative relationship with financial leverage and a positive relationship with equity to assets ratio. This relationship is identified at Islamic banks, Conventional banks and all the banks of the sample. Bank size has a positive relationship with ROA and ROE as performance measures in Islamic and Conventional banks.

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“…Yudistira, 2004;Hassan, 2005;Rossi, Schwaiger & Winkler, 2005;Delis & Papanikolaou, 2009;Srairi, 2010;Siddiqui & Shoaib, 2011). As a general rule, larger firms tend to have higher level of efficiency.…”

Section: Bank Sizementioning

confidence: 99%

“…There will be numerous effects to different types of banks. Berger, Hunter & Timme (1993) and also Miller & Noulas (1996) reviewed that wider penetration of market and increase in profit at less cost by large banks, hence better efficiency; while Rossi et al (2005) added another reason that larger banks would have better efficiency to control its cost better. On the other side, the effect of size could be negative for banks that are extremely large due to bureaucracy (Nigmonov, 2010).…”

Section: Bank Sizementioning

confidence: 99%

Determinants of Bank Efficiency: Conventional versus Islamic

Rozzani¹,

Rahman²

2013

IJBM

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This study explores the area of bank efficiency with the usage of Stochastic Frontier Analysis. The main objective is to identify determinants affecting conventional and Islamic banks' efficiency, focusing towards banks in Malaysia. Year-end financial data was obtained from a sample of 19 conventional banks and 16 Islamic banks that operate in Malaysia, where these banks' annual reports from the years 2008 until 2011 were referred for the purpose of analysis. An overall view of the results indicates that the levels of profit efficiency for both conventional and Islamic banks in Malaysia were highly similar. Further, it could be observed that efficiency would be better for conventional banks with the increment of bank size and also the decrement of both operational cost and credit risk, while the efficiency for Islamic banks would be better with only the decrement of operational cost.

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Managerial Behavior and Cost/Profit Efficiency in the Banking Sectors of Central and Eastern European Countries

Cited by 52 publications

References 31 publications

Loan efficiency in the Visegrad countries

Loan efficiency in the Visegrad countries

The Relationship between Capital Structure and Performance in Gulf Countries Banks: A Comparative Study between Islamic Banks and Conventional Banks

Determinants of Bank Efficiency: Conventional versus Islamic

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