Bank Efficiency and Undesirable Output : An Analysis of Non-Performing Loans in the Brazilian Banking Sector

This work empirically evaluates the level of technical efficiency of Brazilian banks considering the volume of non-performing loans (NPLs) and their determinants. We made this in a two-stage analysis. In the first stage, the results suggest that for the type of ownership, foreign banks were more efficient than national public and national private banks in most of the historical series. Regarding asset size, large banks are more efficient than medium and small banks. For the second stage, the determinants of technical efficiency indicate that the capital adequacy, net profit margin, NPL ratio, and inflation are significant in all models examined