Efficiency in Banking: Does the Choice of Inputs and Outputs Matter?

Yong Tan, Constantin Zopounidis, Christos Floros, Christos Lemonakis, Alexandros Garefalakis, Efthalia Tabouratzi

Research output: Contribution to journalArticle

Abstract

This paper examines banking efficiency using recent data from PIGS countries (i.e.: Portugal, Italy, Greece and Spain) which suffer from debt problems. We employ a 2-stage approach based on the effect of several items of balance sheets on cash flows and DEA analysis. More specifically, we extend previous studies by giving attention to the deposit dilemma. The reported results show that the choice of inputs and outputs does matter in the case of European banking efficiency. Although the role of deposits is controversial, we find that deposits may be an output variable, due to liquidity issues that play major role in the efficiency of PIGS’ banking sector. We also report that the DEA model with deposits as an output variable generates efficiency scores that fall between periods. These results are helpful to bank managers and financial analysts dealing with efficiency modeling.
LanguageEnglish
JournalInternational Journal of Computational Economics and Econometrics
Publication statusAccepted/In press - 20 Nov 2017

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Banking
Deposits
Italy
European banking
Financial analysts
Cash flow
Balance sheet
Banking sector
Debt
Portugal
DEA analysis
Greece
Modeling
DEA model
Spain
Managers
Liquidity

Cite this

Tan, Y., Zopounidis, C., Floros, C., Lemonakis, C., Garefalakis, A., & Tabouratzi, E. (Accepted/In press). Efficiency in Banking: Does the Choice of Inputs and Outputs Matter? International Journal of Computational Economics and Econometrics.
Tan, Yong ; Zopounidis, Constantin ; Floros, Christos ; Lemonakis, Christos ; Garefalakis, Alexandros ; Tabouratzi, Efthalia. / Efficiency in Banking : Does the Choice of Inputs and Outputs Matter?. In: International Journal of Computational Economics and Econometrics. 2017.
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Efficiency in Banking : Does the Choice of Inputs and Outputs Matter? / Tan, Yong; Zopounidis, Constantin; Floros, Christos; Lemonakis, Christos ; Garefalakis, Alexandros; Tabouratzi, Efthalia.

In: International Journal of Computational Economics and Econometrics, 20.11.2017.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Efficiency in Banking

T2 - International Journal of Computational Economics and Econometrics

AU - Tan, Yong

AU - Zopounidis, Constantin

AU - Floros, Christos

AU - Lemonakis, Christos

AU - Garefalakis, Alexandros

AU - Tabouratzi, Efthalia

PY - 2017/11/20

Y1 - 2017/11/20

N2 - This paper examines banking efficiency using recent data from PIGS countries (i.e.: Portugal, Italy, Greece and Spain) which suffer from debt problems. We employ a 2-stage approach based on the effect of several items of balance sheets on cash flows and DEA analysis. More specifically, we extend previous studies by giving attention to the deposit dilemma. The reported results show that the choice of inputs and outputs does matter in the case of European banking efficiency. Although the role of deposits is controversial, we find that deposits may be an output variable, due to liquidity issues that play major role in the efficiency of PIGS’ banking sector. We also report that the DEA model with deposits as an output variable generates efficiency scores that fall between periods. These results are helpful to bank managers and financial analysts dealing with efficiency modeling.

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KW - Deposits dilemma

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KW - Banking sector

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KW - 2-stage approach

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