Turkish bank efficiency: Bayesian estimation with undesirable outputs

By A. Assaf, Roman Matousek, Efthymios G. Tsionas. 2013

133 citations recorded by the source corpus.

This paper analyzes the productivity and efficiency of Turkish banks from 2002 to 2010. We obtained estimates of efficiency, productivity growth and efficiency growth using a Bayesian stochastic frontier approach and focused on accounting for Non-Performing Loans (NPLs) for use in our model. Specifically, we introduce NPLs as a bad output in an input distance function, and estimate a system of non-linear equations subject to endogeneity. We confirm that the productivity growth of Turkish banks was positive over the period of this study, which was mainly due to the improvement in technology, while efficiency growth continued to be negative over the same period. Methodologically, we also prove that not accounting for NPLs in estimating the frontier model might seriously distort the efficiency and productivity results. The study also provides measures of shadow prices for NPL and discusses the results in terms of several interesting trends in Turkish banking. Finally, the paper provides efficiency and productivity comparisons between domestic and foreign banks.

Subfields: Accounting, Finance, Management Science and Operations Research

View Paper: https://www.semanticscholar.org/paper/9f3d92e7ff93a22ae05e63ee671133721353bdb5

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. Elmira Partovi
2. Roman Matousek
3. Hidemichi Fujii
4. Shunsuke Managi

In Finance

1. Hidemichi Fujii
2. Shunsuke Managi
3. Elmira Partovi
4. Roman Matousek

In Management Science and Operations Research

1. Hidemichi Fujii
2. Shunsuke Managi
3. Elmira Partovi
4. Roman Matousek

Citations in the corpus

• Bank efficiency and non-performing loans: Evidence from Turkey (2019, background): “According to Assaf et al. (2013), Ozkan-Gunay and Tektas (2006), and Isik and Hassan (2002, 2003), the denomination of variables in US dollars instead of the Turkish Lira not only benefits the literature by managing the possible impact of inflation on real magnitudes, but can also allow a direct adj”
• Indian bank efficiency and productivity changes with undesirable outputs: A disaggregated approach (2013, background): “The most recent study by Assaf et al. (2013) confirms Barros et al’s (2012) results, showing that NPLs have to be integrated in the model.”