Evolution of bank efficiency in Brazil: A DEA approach

This paper investigates cost, technical and allocative efficiencies for Brazilian banks in the recent period (2000–2007). We use Data Envelopment Analysis (DEA) to compute efficiency scores. Brazilian banks were found to have low levels of economic (cost) efficiency compared to banks in Europe and i...

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Bibliographic Details
Published in:European journal of operational research 2010-04, Vol.202 (1), p.204-213
Main Authors: Staub, Roberta B., da Silva e Souza, Geraldo, Tabak, Benjamin M.
Format: Article
Language:English
Subjects:
Applied sciences
Bank consolidation
Bank efficiency
Banking industry
Data envelopment analysis
DEA
DEA Bank efficiency Emerging markets Bank consolidation Ownership
Economics
Efficiency
Emerging markets
Exact sciences and technology
Firm modelling
General aspects
Mathematics
Nonparametric inference
Operational research and scientific management
Operational research. Management science
Ownership
Probability and statistics
Sciences and techniques of general use
Statistics
Studies
Volatility
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Summary:This paper investigates cost, technical and allocative efficiencies for Brazilian banks in the recent period (2000–2007). We use Data Envelopment Analysis (DEA) to compute efficiency scores. Brazilian banks were found to have low levels of economic (cost) efficiency compared to banks in Europe and in the US. For the period with high macroeconomic volatility (2000–2002) the economic inefficiency in Brazilian banks can be attributed mainly to technical inefficiency rather than allocative inefficiency. State-owned banks are significantly more cost efficient than foreign, private domestic and private with foreign participation. There is no evidence of differences in economic efficiency due to type of activity and bank size. These results may provide some useful guidance for financial regulators and bank managers.
ISSN:0377-2217
1872-6860
DOI:10.1016/j.ejor.2009.04.025