Efficiency in the Greek Banking Industry: A Comparison of Foreign and Domestic Banks

This study uses a sample of foreign and domestic banks operating in Greece during 1999-2004 to examine the impact of ownership on efficiency. We estimate an input oriented data envelopment analysis (DEA) model under variable returns to scale with inputs and outputs selected on the basis of a profit-oriented approach. The results indicate an average pure technical efficiency equal to 0.7325 showing that the banks in sample could improve their efficiency by 26.75%. Over the same period, scale efficiency was equal to 0.6830. The comparison of the efficiency scores by group of ownership shows that domestic banks have higher pure technical efficiency and lower scale efficiency; however, the differences are not statistically significant. A DEA window-analysis confirms the results of the cross-section estimations. We also estimate a Tobit regression model but consistent with the univariate results we find no evidence to support the argument that ownership has a statistically significant impact on efficiency.