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Turkish bank efficiency: Bayesian estimation with undesirable outputs
journal contribution
posted on 2023-06-08, 12:29 authored by A George Assaf, Roman Matousek, Efthymios G TsionasThis paper analyzes the productivity and efficiency of Turkish banks from 2002 to 2010. We obtained estimates of efficiency, productivity growth and efficiency growth using a Bayesian stochastic frontier approach and focused on accounting for Non-Performing Loans (NPLs) for use in our model. Specifically, we introduce NPLs as a bad output in an input distance function, and estimate a system of non-linear equations subject to endogeneity. We confirm that the productivity growth of Turkish banks was positive over the period of this study, which was mainly due to the improvement in technology, while efficiency growth continued to be negative over the same period. Methodologically, we also prove that not accounting for NPLs in estimating the frontier model might seriously distort the efficiency and productivity results. The study also provides measures of shadow prices for NPL and discusses the results in terms of several interesting trends in Turkish banking. Finally, the paper provides efficiency and productivity comparisons between domestic and foreign banks.
History
Publication status
- Published
Journal
Journal of Banking and FinanceISSN
03784266Publisher
ElsevierExternal DOI
Issue
2Volume
37Page range
506-517Department affiliated with
- Business and Management Publications
Notes
Accepted manuscript; online first editionFull text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2012-10-03Usage metrics
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