Evaluating Scale Efficiency of Ukrainian Banks Using DEA
The article there built DEA models with variable return to scale (VRS) and constant return to scale (CRS), which made it possible to determine the change in efficiency with a change in the scale of operations and to assess the scale efficiency of Ukrainian banks for 2017. It is assumed that a bank h...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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PH "INZHEK"
2018-12-01
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| Series: | Problemi Ekonomiki |
| Subjects: | |
| Online Access: | http://www.problecon.com/export_pdf/problems-of-economy-2018-4_0-pages-233_240.pdf |
| _version_ | 1797331480066654208 |
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| author | Kyshakevych Bohdan Yu. Mazharov Dmytro V. |
| author_facet | Kyshakevych Bohdan Yu. Mazharov Dmytro V. |
| author_sort | Kyshakevych Bohdan Yu. |
| collection | DOAJ |
| description | The article there built DEA models with variable return to scale (VRS) and constant return to scale (CRS), which made it possible to determine the change in efficiency with a change in the scale of operations and to assess the scale efficiency of Ukrainian banks for 2017. It is assumed that a bank has an efficient scale if the volume of its active operations is optimal or, in other words, if any changes in their volume would have made it less efficient. The value of the scale efficiency of a bank is obtained by dividing the CRS by the VRS. The scale efficiency measures the closeness of the size of a bank’s operations to the scale that is most efficient for it. It is found that large state-owned banks had a higher average VRS of technical efficiency than other groups of banks. However, large state-owned banks demonstrated a low level of SE with the diminishing return to scale (DRS). This indicates the inefficient use by state-owned banks of their resources and the need to reduce the scale of their operations in order to achieve their most efficient scale of activity, which is obtained in the article on the basis of the CRS model. Moreover, there considered the negative impact on the banking business in Ukraine of significant preferences provided by the NBU to state-owned banks, namely: full guarantee of deposits in them, access to virtually unlimited refinancing, etc. The analysis demonstrates that the majority of small Ukrainian banks functioned with increasing return to scale (IRS), which indicates the potential for economies of scale and the need to scale up their operations to maximize returns on existing inputs. In the article there obtained the average values of VRS, CRS, and SE for the entire banking system of Ukraine for 2017 with the income and intermediary approaches, and calculated correlations between them. |
| first_indexed | 2024-03-08T07:35:11Z |
| format | Article |
| id | doaj.art-5bdeacdf0b43452f9410ebc57def92c0 |
| institution | Directory Open Access Journal |
| issn | 2222-0712 2311-1186 |
| language | English |
| last_indexed | 2024-03-08T07:35:11Z |
| publishDate | 2018-12-01 |
| publisher | PH "INZHEK" |
| record_format | Article |
| series | Problemi Ekonomiki |
| spelling | doaj.art-5bdeacdf0b43452f9410ebc57def92c02024-02-02T19:08:39ZengPH "INZHEK"Problemi Ekonomiki2222-07122311-11862018-12-01438233240https://doi.org/10.32983/2222-0712-2018-4-233-240Evaluating Scale Efficiency of Ukrainian Banks Using DEAKyshakevych Bohdan Yu.0Mazharov Dmytro V.1Doctor of Sciences (Economics), Professor, Head of the Department, Department of Economics and Management, I. Franko Drogobych State Pedagogical University Postgraduate Student, I. Franko Drogobych State Pedagogical UniversityThe article there built DEA models with variable return to scale (VRS) and constant return to scale (CRS), which made it possible to determine the change in efficiency with a change in the scale of operations and to assess the scale efficiency of Ukrainian banks for 2017. It is assumed that a bank has an efficient scale if the volume of its active operations is optimal or, in other words, if any changes in their volume would have made it less efficient. The value of the scale efficiency of a bank is obtained by dividing the CRS by the VRS. The scale efficiency measures the closeness of the size of a bank’s operations to the scale that is most efficient for it. It is found that large state-owned banks had a higher average VRS of technical efficiency than other groups of banks. However, large state-owned banks demonstrated a low level of SE with the diminishing return to scale (DRS). This indicates the inefficient use by state-owned banks of their resources and the need to reduce the scale of their operations in order to achieve their most efficient scale of activity, which is obtained in the article on the basis of the CRS model. Moreover, there considered the negative impact on the banking business in Ukraine of significant preferences provided by the NBU to state-owned banks, namely: full guarantee of deposits in them, access to virtually unlimited refinancing, etc. The analysis demonstrates that the majority of small Ukrainian banks functioned with increasing return to scale (IRS), which indicates the potential for economies of scale and the need to scale up their operations to maximize returns on existing inputs. In the article there obtained the average values of VRS, CRS, and SE for the entire banking system of Ukraine for 2017 with the income and intermediary approaches, and calculated correlations between them.http://www.problecon.com/export_pdf/problems-of-economy-2018-4_0-pages-233_240.pdfscale efficiencytechnical efficiencyDEAeconomies of the scaleUkrainian banksintermediary approach |
| spellingShingle | Kyshakevych Bohdan Yu. Mazharov Dmytro V. Evaluating Scale Efficiency of Ukrainian Banks Using DEA Problemi Ekonomiki scale efficiency technical efficiency DEA economies of the scale Ukrainian banks intermediary approach |
| title | Evaluating Scale Efficiency of Ukrainian Banks Using DEA |
| title_full | Evaluating Scale Efficiency of Ukrainian Banks Using DEA |
| title_fullStr | Evaluating Scale Efficiency of Ukrainian Banks Using DEA |
| title_full_unstemmed | Evaluating Scale Efficiency of Ukrainian Banks Using DEA |
| title_short | Evaluating Scale Efficiency of Ukrainian Banks Using DEA |
| title_sort | evaluating scale efficiency of ukrainian banks using dea |
| topic | scale efficiency technical efficiency DEA economies of the scale Ukrainian banks intermediary approach |
| url | http://www.problecon.com/export_pdf/problems-of-economy-2018-4_0-pages-233_240.pdf |
| work_keys_str_mv | AT kyshakevychbohdanyu evaluatingscaleefficiencyofukrainianbanksusingdea AT mazharovdmytrov evaluatingscaleefficiencyofukrainianbanksusingdea |