Chambers, Nurgul and Cifter, Atilla (2006): The Effect of Scale on Productivity of Turkish Banks in the PostCrises Period: An Application of Data Envelopment Analysis.

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Abstract
The purpose of this paper is to investigate the productivity of Turkish Banks according to the effect of scale in the PostCrises Period. The data used in this study covers the period from 2002:1 to 2004:3. We applied Data Envelopment Analysis (DEA), which is a nonparametric linear programmingbased technique for measuring relative performance of decisionmaking units (DMUs). We calculated DEA as constant & variable returntoscale based on output oriented Malmquist Index. Although the scale effect can be measured with DEA scale efficiency measurement, we used scale indicators as input variables in order to find out not only scale efficiency but also scale affect directly. We applied DEA by using financial ratios (Athanassopoulos and Ballantine, 1995; Yeh, 1996) and branch & personel number indicators. This study uses five input variables as i) branch numbers, ii) personnel number per branch, iii) share in total assets, iv) share in total loans, v) share in total deposits; and five output variables as i) net profitlosses/total assets (ROA), ii) net profitlosses/total shareholders equity (ROE), iii) net interest income/total assets, iv) net interest income/ total operating income, and v) noninterest income/total assets. We find that difference in efficiency is mainly from technical efficiency rather than scale efficiency in the postcrises period. The other finding reveals that efficiency approximate between selected banks and supporting that advantage of scale economies can be lost in Turkish banking. Overall, the results confirm that Turkish banking has U shaped Scale Efficiency on selected profitability ratios. The application of this paper based on other financial ratios with decreasing and increasing returntoscale DEA is left to future research.
Item Type:  MPRA Paper 

Institution:  Marmara University 
Original Title:  The Effect of Scale on Productivity of Turkish Banks in the PostCrises Period: An Application of Data Envelopment Analysis 
Language:  English 
Keywords:  Turkish Banks; Return to Scale; Scale Efficiency; Profit Efficiency; Data Envelopment Analysis 
Subjects:  G  Financial Economics > G2  Financial Institutions and Services > G21  Banks; Depository Institutions; Micro Finance Institutions; Mortgages C  Mathematical and Quantitative Methods > C2  Single Equation Models; Single Variables > C23  Models with Panel Data; Longitudinal Data; Spatial Time Series G  Financial Economics > G2  Financial Institutions and Services 
Item ID:  2487 
Depositing User:  Atilla Cifter 
Date Deposited:  02. Apr 2007 
Last Modified:  23. Feb 2013 03:24 
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URI:  http://mpra.ub.unimuenchen.de/id/eprint/2487 