Efficiency of banks in Croatia
Croatian banking sector amounts to the majority of its financial sector. Therefore, it is necessary that Croatian banks operate efficiently. In the past two decades, the Croatian banking sector went through a consolidation process that steadily decreased the number of banks and allocated the majo...
Main Authors: | , |
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Format: | Article |
Language: | deu |
Published: |
Faculty of Economics University of Rijeka
2022-12-01
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Series: | Zbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu |
Subjects: | |
Online Access: | https://www.efri.uniri.hr/upload/zbornik%202%202021/04-Uckar-Petrovic-2021-2.pdf |
Summary: | Croatian banking sector amounts to the majority of its financial sector. Therefore,
it is necessary that Croatian banks operate efficiently. In the past two decades, the
Croatian banking sector went through a consolidation process that steadily
decreased the number of banks and allocated the majority of assets and market
share to a few large banks. A simple definition of efficiency is cost minimization
and profit maximization. Therefore, a bank is efficient when it strives to minimize
its costs while maximizing its profits. This paper aims to estimate efficiency of
Croatian banks using the DEA methodology within the period 2014-2019. In
addition, the performance indicators (return on assets, return on equity) calculated
for the same period aim at comparing performance indicators to efficiency results.
The results indicate that larger banks are generally more efficient in operating on
the frontier. And, in comparison to performance indicators, they achieve higher
levels of returns on assets and equity. Furthermore, some small banks tend to be
efficient, while the benefits of being a medium bank are inconclusive since the
results reveal that some medium banks have below average efficiency. Overall,
average efficiency improved in the observed period, which means that the
consolidation process of financial institutions creates large and efficient banks. |
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ISSN: | 1331-8004 1846-7520 |