bank efficiency in turkey during the recent global crisis shahram taj, ph.d. professor of management...

Bank Efficiency in Turkey Bank Efficiency in Turkey During the Recent Global During the Recent Global Crisis Crisis Shahram Taj, Ph.D.Professor of Management Hassan Shirvani, Ph.D.Professor of Economics and Finance Bahman Mirshab, Ph.D.Professor of Management Science and Dean Akif Ahmet Ziya, MBA.

Reading QuestionsReading Questions

What is technical efficiency?

What is DEA?

What is the change in bank efficiency in Turkey throughout the recent crisis by using the standard DEA?

OutlineOutlineIntroduction

Model

Empirical Results

Conclusion

Introduction Introduction Technical Efficiency It is defined as the production of a desired level of

output with the minimum amounts of inputs.

Technical efficiency whether a productive unit is

efficient relative to others whether a firm is

efficient. Typical business entity can be considered as

technically

efficient relative to its competitors

IntroductionIntroductionDEA – Data Envelopment Analysis

offers an empirical approach to the efficient frontier for a collection of firms through an assessment of their individual performances.

DEA – A tool for efficiency a particularly powerful tool for assessing operational

efficiency in

service organizations.

DEA – A subject a subject of extensive theoretical refinements and empirical applications.

ModelModelStandard DEA Model

The efficiency an arbitrary bank i (i = 1,…,k) is defined as follows:

Hi = (Weighted sum of bank i’s outputs) / (Weighted sum of bank i’s inputs)

=

ModelModelQuestion:

How to perfect the substitutability among outputs and inputs?

-- Standard optimization

Empirical ResultsEmpirical ResultsTable 1: The 2007 Data for 26 Turkish Banks

Table 2: The 2010 Data for 26 Turkish Banks

Table 3: Log (outputs) and Log (inputs) and the DEA efficiency for 26 Turkish commercial banks in 2007

Table 4: Log (outputs) and Log (inputs) and the DEA efficiency for 26 Turkish commercial banks in 2010

Table 5: Efficiencies Comparison Pre and Post Recession

ConclusionConclusionUsing a modified version of the standard

DEA for a sample of 26 major Turkish Banks for 2007 and 2010

First, the prevalence of substantial inefficiencies amount the Turkish banks

Second, Obtained essentially similar results with even show a more dramatic decline in recent bank efficiency in Turkey.

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