The effects of shared ATM networks on the efficiency of Turkish banks

Abstract

This study investigates whether forming shared ATM networks has yielded positive benefits for banks in Turkey by increasing their productive efficiency. Using a Data Envelopment Analysis (DEA) approach, pure technical and scale efficiency scores of Turkish banks are estimated and analysed for the period 2000–2003. The results suggest that although it is possible to realize positive effects through ATM sharing arrangements, there are multiple factors that determine which banks realize such benefits. The geographical distribution of shared ATMs between urban and rural markets and the level of competition between banks within urban areas are shown to be important determinants of differences in bank efficiency. This discrepancy between the gains associated with ATM sharing may have important implications concerning the adoption and sharing of new technology by banks in developing countries.

A Lesson Learned? Pre‐ and Postcrisis Entry Decisions in Turkish Banking

“…For the precrisis period, the positive coefficient of COMPETITION might reflect a strategic decision on mimicking similarly sized banks’ location choices. This would agree with the argument of Damar (2006) that especially small‐ and medium‐sized banks have concentrated all their resources in the same areas without paying significant attention to cost or efficiency concerns. This may have been caused by high net interest margins and full deposit insurance prompting banks to engage in aggressive interest rate competition and ignore nonprice costs of deposits.…”

“…In addition to reducing agency costs, having a well‐established presence in the neighboring provinces can allow a bank to use its resources on expanding into nearby markets (rather than focusing on solidifying the market share of its existing branches). COMPETITION measures the number of bank branches per capita in province i that belong to bank b ’s direct competitors 9 Damar (2006). observes that Turkish banks tend to compete within their size category, so a higher concentration of similarly sized banks in a market may result in more intense competition, translating into higher costs.…”

“…Furthermore, she argues that most banks exhibited Decreasing Returns to Scale during this period, implying that they grew past the optimal scale. Damar (2006) observes low‐scale efficiency scores for 2000 and 2001. Özkan‐Günay and Tektaş (2006) also note decreasing overall efficiency during the 1990s, but they do not calculate individual‐scale efficiency scores.…”

Do more cards and terminals guarantee higher efficiency? The case of European Union banking

“…This method is very popular in last years, as it allows multiple inputs and multiple outputs in the analysis of relative efficiency within the data set and under the used variables. Damar (2006) used the DEA method to estimate the contribution of ATM networks on the productive efficiency of selected Turkish banks. He used the DEA method to calculate technical efficiency and scale efficiency during 2000-2003. The author examines whether the bank obtains positive benefits of implementing ATMs.…”

The use of credit cards and bank efficiency

“…Väã‰ina ‰túdií zaoberajúca sa problematikou efektívnosti a v˘konnosti sleduje hlavne dopady finanãnej liberalizácie na v˘konnosÈ a efektívnosÈ bánk (napr. [7]). Jedn˘m z aspektov finanãnej liberalizácie je aj otváranie sa bankov˘ch sektorov a zvy‰ovanie dostupnosti finanãn˘ch prostriedkov, napríklad prijímaním a zavádzaním nov˘ch technológií.…”