Efficiency and productivity in banks developed through Data Envelopment Analysis: a cross country-perspective

The paper analyzes the efficiency and productivity of the most important banking system from 2006-08 and tries to address the long-term challenges posed by the global financial crisis. A non-parametric frontier analysis (DEA) is applied to estimate the relative efficiency of banks segments in six industrial countries. A Malmquist decomposition is then carried out in order to separate efficiency change from technical change. Based on a large sample of banks, our findings reveal that banking efficiency has decreased since 2007. If in 2006 eight of the 13 banking sectors included in the study were situated on the efficiency frontier, in 2008 only three of them succeeded in reaching this frontier. In what concerns the productivity we observe an obvious tendency of aggravation. Therefore this index knew a decrease of 9.1% in 2007 in comparison with 2006 and it also continued to decrease in 2008.