Research Article
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Year 2023, , 26 - 32, 01.02.2023

Ibrahim Yaglı

https://doi.org/10.17261/Pressacademia.2023.1660

Abstract

Keywords

Efficiency Islamic banking conventional banking Data Envelopment Analysis (DEA)

References

  • Ada, A. A., & Dalkılıç, N. (2014). Efficiency analysis in Islamic banks: A study for Malaysia and Turkey. BDDK Bankacılık ve Finansal Piyasalar Dergisi, 8(1), 9-33.
  • Arslan, B. G., & Ergec, E. H. (2010). The efficiency of participation and conventional banks in Turkey: using data envelopment analysis. International Research Journal of Finance and Economics, 57, 156-168.
  • Asutay, M. (2013). The development of Islamic banking in Turkey: Regulation, performance and political economy. Islamic Finance in Europe, 213-227.
  • Banker, R. D., Charnes, A., & Cooper, W. W. (1984). Some models for estimating technical and scale inefficiencies in data envelopment analysis. Management Science, 30(9), 1078-1092.
  • Batir, T. E., Volkman, D. A., & Gungor, B. (2017). Determinants of bank efficiency in Turkey: Participation banks versus conventional banks. Borsa Istanbul Review, 17(2), 86-96.
  • Beck, T., Demirgüç-Kunt, A., & Merrouche, O. (2013). Islamic vs. conventional banking: Business model, efficiency and stability. Journal of Banking and Finance, 37(2), 433-447.
  • Benston, G. J. (1965). Branch banking and economies of scale. The Journal of Finance, 20(2), 312-331.
  • Berger, A. N., & Humphrey, D. B. (1997). Efficiency of financial institutions: International survey and directions for future research. European Journal of Operational Research, 98(2), 175-212.
  • Casu, B., & Molyneux, P. (2003). A comparative study of efficiency in European banking. Applied Economics, 35(17), 1865-1876.
  • Charnes, A., Cooper, W. W., & Rhodes, E. (1978). Measuring the efficiency of decision making units. European Journal of Operational Research, 2(6), 429-444.
  • Delice, G., & Karadaş, H. A (2022). The Effects of Global Economic Crises on Performance of Participation Banks: The Case of the Covid-19 Outbreak. Erciyes University Journal of Faculty of Economics and Administrative Sciences, 62, 87-119.
  • Denizer, C. A., Dinc, M., & Tarimcilar, M. (2007). Financial liberalization and banking efficiency: evidence from Turkey. Journal of Productivity Analysis, 27(3), 177-195.
  • DeYoung, R., & Hasan, I. (1998). The performance of de novo commercial banks: A profit efficiency approach. Journal of Banking & Finance, 22(5), 565-587.
  • Drake, L., & Howcroft, B. (1994). Relative efficiency in the branch network of a UK bank: an empirical study. Omega, 22(1), 83-90.
  • El‐Gamal, M. A., & Inanoglu, H. (2005). Inefficiency and heterogeneity in Turkish banking: 1990–2000. Journal of Applied Econometrics, 20(5), 641-664.
  • Ersoy, I. (2009). The impact of the global financial crisis on the efficiency of foreign banks in Turkey. In 12th International Conference on Finance & Banking: Structural & Regional Impacts of Financial Crises.
  • European Central Bank Financial Stability Review (2020), Retrieved from: https://www.ecb.europa.eu/pub/financial-stability/fsr/html/ecb.fsr202011~b7be9ae1f1.en.html#toc12
  • Farrell, M. J. (1957). The measurement of productive efficiency. Journal of the Royal Statistical Society: Series A (General), 120(3), 253-281.
  • Fethi, M. D., & Pasiouras, F. (2010). Assessing bank efficiency and performance with operational research and artificial intelligence techniques: A survey. European Operational Research, 204(2), 189-198.
  • Fukuyama, H., & Matousek, R. (2011). Efficiency of Turkish banking: Two-stage network system. Variable returns to scale model. Journal of International Financial Markets, Institutions and Money, 21(1), 75-91.
  • Gungen, A. R. (2020). Turkey’s Public Banks amid the Covid-19 Pandemic. Public Banks and COVID-19, 333-352.
  • Henriques, I. C., Sobreiro, V. A., Kimura, H., & Mariano, E. B. (2018). Efficiency in the Brazilian banking system using data envelopment analysis. Future Business Journal, 4(2), 157-178.
  • Isik, I., & Hassan, M. K. (2002). Technical, scale and allocative efficiencies of Turkish banking industry. Journal of Banking & Finance, 26(4), 719-766.
  • Ismail, F., Majid, M. S. A., & Rahim, R. A. (2013). Efficiency of Islamic and conventional banks in Malaysia. Journal of Financial Reporting and Accounting, 11(1), 92-107.
  • Kamarudin, F., Sufian, F., Loong, F. W., & Anwar, N. A. M. (2017). Assessing the domestic and foreign Islamic banks efficiency: Insights from selected Southeast Asian countries. Future Business Journal, 3(1), 33-46.
  • Kinsella, R. P. (1980). The measurement of bank output. Journal of the Institute of Bankers in Ireland, 82(3), 173-182.
  • Kumar, S., & Gulati, R. (2008). An examination of technical, pure technical, and scale efficiencies in Indian public sector banks using data envelopment analysis. Eurasian Journal of Business and Economics, 1(2), 33-69.
  • Majeed, M. T., & Zanib, A. (2016). Efficiency analysis of Islamic banks in Pakistan. Humanomics, 32(1), 19-32.
  • Octrina, F., & Mariam, A. G. S. (2021). Islamic bank efficiency in Indonesia: Stochastic frontier analysis. The Journal of Asian Finance, Economics and Business, 8(1), 751-758.
  • Oral, M., & Yolalan, R. (1990). An empirical study on measuring operating efficiency and profitability of bank branches. European Journal of Operational Research, 46(3), 282-294.
  • Ozkan‐gunay, E. N., & Tektas, A. (2006). Efficiency analysis of the Turkish banking sector in precrisis and crisis period: A DEA approach. Contemporary Economic Policy, 24(3), 418-431.
  • Ozkan-gunay, E. N., Gunay, Z. N., & Gunay, G. (2013). The impact of regulatory policies on risk taking and scale efficiency of commercial banks in an emerging banking sector. Emerging Markets Finance and Trade, 49(5), 80-98.
  • Partovi, E., & Matousek, R. (2019). Bank efficiency and non-performing loans: Evidence from Turkey. Research in international Business and Finance, 48, 287-309.
  • Řepková, I. (2014). Efficiency of the Czech banking sector employing the DEA window analysis approach. Procedia Economics and Finance, 12, 587-596.
  • Resti, A. (1997). Evaluating the cost-efficiency of the Italian banking system: What can be learned from the joint application of parametric and non-parametric techniques. Journal of Banking & Finance, 21(2), 221-250.
  • Sathye, M. (2003). Efficiency of banks in a developing economy: The case of India. European Journal of Operational Research, 148(3), 662-671.
  • Schaffnit, C., Rosen, D., & Paradi, J. C. (1997). Best practice analysis of bank branches: an application of DEA in a large Canadian bank. European Journal of Operational Research, 98(2), 269-289.
  • Sealey Jr, C. W., & Lindley, J. T. (1977). Inputs, outputs, and a theory of production and cost at depository financial institutions. The Journal of Finance, 32(4), 1251-1266.
  • Sherman, H. D., & Gold, F. (1985). Bank branch operating efficiency: Evaluation with data envelopment analysis. Journal of Banking & Finance, 9(2), 297-315.
  • Staub, R.B., Souza, G. D. S., & Tabak, B. M. (2010). Evolution of bank efficiency in Brazil: A DEA approach. European Journal of Operational Research, 202(1), 204-213.
  • Sufian, F. (2007). The efficiency of Islamic banking industry in Malaysia: Foreign vs domestic banks. Humanomics, 23(3), 174-192.
  • Sufian, F., & Noor, M. A. N. M. (2009). The determinants of Islamic banks' efficiency changes: Empirical evidence from the MENA and Asian banking sectors. International Journal of Islamic and Middle Eastern Finance and Management, 2(2), 120-138.
  • Tavsanli, M. B., & Hamlaci, T (2021). Financial Performance of Turkish Banks in the Covid-19 Era: A Cluster Analysis. Journal of Economics Finance and Accounting, 8(4), 184-189.
  • The Banks Association of Turkey (2022), Banking Sector Report 2022. Retrieved from: https://www.tbb.org.tr/en/Content/Upload/Dokuman/1204/Banking_Sector_-_June_2022.pdf
  • Unlu, U., Yalcin, N., & Avsarlıgil, N. (2022). Analysis of Efficiency and Productivity of Commercial Banks in Turkey Pre-and during COVID-19 with an Integrated MCDM Approach. Mathematics, 10(13), 2300-2310.
  • Yildirim, C. (2002). Evolution of banking efficiency within an unstable macroeconomic environment: the case of Turkish commercial banks. Applied Economics, 34(18), 2289-2301.
  • Yilmaz, A. A. (2013). Bank efficiency analysis in Turkish banking system. In WEU International Academic Conference Proceedings, 112-121.
  • Yilmaz, A., & Gunes, N. (2015). Efficiency comparison of participation and conventional banking sectors in Turkey between 2007-2013. Procedia-Social and Behavioral Sciences, 195, 383-392.
  • Zaim, O. (1995). The effect of financial liberalization on the efficiency of Turkish commercial banks. Applied Financial Economics, 5(4), 257-264

EFFICIENCY ASSESSMENT OF THE TURKISH BANKING SECTOR IN THE PRE- AND DURING COVID-19 PANDEMIC PERIODS

Year 2023, , 26 - 32, 01.02.2023

Ibrahim Yaglı

https://doi.org/10.17261/Pressacademia.2023.1660

Abstract

Purpose- As in most emerging economies, banks are the backbone of the Turkish financial system. The banking sector has also undergone many changes such as the liberalization process in the 1980s, and the inclusion of participation banks in 2005, which have caused increased competition in the sector. Therefore, the performance of the Turkish banking sector is always under the scrutiny of regulators and bank managers as well as investors. Considering the devastating impact of the Covid-19 pandemic on the banking sector, the study aims to evaluate the efficiency of deposit and participation banks in the pre- and during pandemic periods.
Methodology - Data envelopment analysis is applied to evaluate the relative efficiency of Turkish banks from 2019 through 2021. Adopting the intermediation approach, deposits and labor are employed as inputs while loans and net interest income are used as outputs.
Findings - The empirical findings show that the average technical efficiency of the Turkish banks is around 85% in the covering periods. Breaking technical-efficiency into pure technical efficiency and scale-efficiency reveals that most of the inefficiency is due to poor management practices rather than diseconomies of scale. When we turn our attention to bank groups, the mean technical efficiency of participation banks is lower than those of deposit banks.
Conclusion - Overall, the efficiency of participation banks is lagged behind the those of deposit banks in Turkey. In addition, Covid-19 does not outstanding effect on the overall efficiency of the Turkish banking sector.

Keywords

Efficiency Islamic banking conventional banking Data Envelopment Analysis (DEA)

References

  • Ada, A. A., & Dalkılıç, N. (2014). Efficiency analysis in Islamic banks: A study for Malaysia and Turkey. BDDK Bankacılık ve Finansal Piyasalar Dergisi, 8(1), 9-33.
  • Arslan, B. G., & Ergec, E. H. (2010). The efficiency of participation and conventional banks in Turkey: using data envelopment analysis. International Research Journal of Finance and Economics, 57, 156-168.
  • Asutay, M. (2013). The development of Islamic banking in Turkey: Regulation, performance and political economy. Islamic Finance in Europe, 213-227.
  • Banker, R. D., Charnes, A., & Cooper, W. W. (1984). Some models for estimating technical and scale inefficiencies in data envelopment analysis. Management Science, 30(9), 1078-1092.
  • Batir, T. E., Volkman, D. A., & Gungor, B. (2017). Determinants of bank efficiency in Turkey: Participation banks versus conventional banks. Borsa Istanbul Review, 17(2), 86-96.
  • Beck, T., Demirgüç-Kunt, A., & Merrouche, O. (2013). Islamic vs. conventional banking: Business model, efficiency and stability. Journal of Banking and Finance, 37(2), 433-447.
  • Benston, G. J. (1965). Branch banking and economies of scale. The Journal of Finance, 20(2), 312-331.
  • Berger, A. N., & Humphrey, D. B. (1997). Efficiency of financial institutions: International survey and directions for future research. European Journal of Operational Research, 98(2), 175-212.
  • Casu, B., & Molyneux, P. (2003). A comparative study of efficiency in European banking. Applied Economics, 35(17), 1865-1876.
  • Charnes, A., Cooper, W. W., & Rhodes, E. (1978). Measuring the efficiency of decision making units. European Journal of Operational Research, 2(6), 429-444.
  • Delice, G., & Karadaş, H. A (2022). The Effects of Global Economic Crises on Performance of Participation Banks: The Case of the Covid-19 Outbreak. Erciyes University Journal of Faculty of Economics and Administrative Sciences, 62, 87-119.
  • Denizer, C. A., Dinc, M., & Tarimcilar, M. (2007). Financial liberalization and banking efficiency: evidence from Turkey. Journal of Productivity Analysis, 27(3), 177-195.
  • DeYoung, R., & Hasan, I. (1998). The performance of de novo commercial banks: A profit efficiency approach. Journal of Banking & Finance, 22(5), 565-587.
  • Drake, L., & Howcroft, B. (1994). Relative efficiency in the branch network of a UK bank: an empirical study. Omega, 22(1), 83-90.
  • El‐Gamal, M. A., & Inanoglu, H. (2005). Inefficiency and heterogeneity in Turkish banking: 1990–2000. Journal of Applied Econometrics, 20(5), 641-664.
  • Ersoy, I. (2009). The impact of the global financial crisis on the efficiency of foreign banks in Turkey. In 12th International Conference on Finance & Banking: Structural & Regional Impacts of Financial Crises.
  • European Central Bank Financial Stability Review (2020), Retrieved from: https://www.ecb.europa.eu/pub/financial-stability/fsr/html/ecb.fsr202011~b7be9ae1f1.en.html#toc12
  • Farrell, M. J. (1957). The measurement of productive efficiency. Journal of the Royal Statistical Society: Series A (General), 120(3), 253-281.
  • Fethi, M. D., & Pasiouras, F. (2010). Assessing bank efficiency and performance with operational research and artificial intelligence techniques: A survey. European Operational Research, 204(2), 189-198.
  • Fukuyama, H., & Matousek, R. (2011). Efficiency of Turkish banking: Two-stage network system. Variable returns to scale model. Journal of International Financial Markets, Institutions and Money, 21(1), 75-91.
  • Gungen, A. R. (2020). Turkey’s Public Banks amid the Covid-19 Pandemic. Public Banks and COVID-19, 333-352.
  • Henriques, I. C., Sobreiro, V. A., Kimura, H., & Mariano, E. B. (2018). Efficiency in the Brazilian banking system using data envelopment analysis. Future Business Journal, 4(2), 157-178.
  • Isik, I., & Hassan, M. K. (2002). Technical, scale and allocative efficiencies of Turkish banking industry. Journal of Banking & Finance, 26(4), 719-766.
  • Ismail, F., Majid, M. S. A., & Rahim, R. A. (2013). Efficiency of Islamic and conventional banks in Malaysia. Journal of Financial Reporting and Accounting, 11(1), 92-107.
  • Kamarudin, F., Sufian, F., Loong, F. W., & Anwar, N. A. M. (2017). Assessing the domestic and foreign Islamic banks efficiency: Insights from selected Southeast Asian countries. Future Business Journal, 3(1), 33-46.
  • Kinsella, R. P. (1980). The measurement of bank output. Journal of the Institute of Bankers in Ireland, 82(3), 173-182.
  • Kumar, S., & Gulati, R. (2008). An examination of technical, pure technical, and scale efficiencies in Indian public sector banks using data envelopment analysis. Eurasian Journal of Business and Economics, 1(2), 33-69.
  • Majeed, M. T., & Zanib, A. (2016). Efficiency analysis of Islamic banks in Pakistan. Humanomics, 32(1), 19-32.
  • Octrina, F., & Mariam, A. G. S. (2021). Islamic bank efficiency in Indonesia: Stochastic frontier analysis. The Journal of Asian Finance, Economics and Business, 8(1), 751-758.
  • Oral, M., & Yolalan, R. (1990). An empirical study on measuring operating efficiency and profitability of bank branches. European Journal of Operational Research, 46(3), 282-294.
  • Ozkan‐gunay, E. N., & Tektas, A. (2006). Efficiency analysis of the Turkish banking sector in precrisis and crisis period: A DEA approach. Contemporary Economic Policy, 24(3), 418-431.
  • Ozkan-gunay, E. N., Gunay, Z. N., & Gunay, G. (2013). The impact of regulatory policies on risk taking and scale efficiency of commercial banks in an emerging banking sector. Emerging Markets Finance and Trade, 49(5), 80-98.
  • Partovi, E., & Matousek, R. (2019). Bank efficiency and non-performing loans: Evidence from Turkey. Research in international Business and Finance, 48, 287-309.
  • Řepková, I. (2014). Efficiency of the Czech banking sector employing the DEA window analysis approach. Procedia Economics and Finance, 12, 587-596.
  • Resti, A. (1997). Evaluating the cost-efficiency of the Italian banking system: What can be learned from the joint application of parametric and non-parametric techniques. Journal of Banking & Finance, 21(2), 221-250.
  • Sathye, M. (2003). Efficiency of banks in a developing economy: The case of India. European Journal of Operational Research, 148(3), 662-671.
  • Schaffnit, C., Rosen, D., & Paradi, J. C. (1997). Best practice analysis of bank branches: an application of DEA in a large Canadian bank. European Journal of Operational Research, 98(2), 269-289.
  • Sealey Jr, C. W., & Lindley, J. T. (1977). Inputs, outputs, and a theory of production and cost at depository financial institutions. The Journal of Finance, 32(4), 1251-1266.
  • Sherman, H. D., & Gold, F. (1985). Bank branch operating efficiency: Evaluation with data envelopment analysis. Journal of Banking & Finance, 9(2), 297-315.
  • Staub, R.B., Souza, G. D. S., & Tabak, B. M. (2010). Evolution of bank efficiency in Brazil: A DEA approach. European Journal of Operational Research, 202(1), 204-213.
  • Sufian, F. (2007). The efficiency of Islamic banking industry in Malaysia: Foreign vs domestic banks. Humanomics, 23(3), 174-192.
  • Sufian, F., & Noor, M. A. N. M. (2009). The determinants of Islamic banks' efficiency changes: Empirical evidence from the MENA and Asian banking sectors. International Journal of Islamic and Middle Eastern Finance and Management, 2(2), 120-138.
  • Tavsanli, M. B., & Hamlaci, T (2021). Financial Performance of Turkish Banks in the Covid-19 Era: A Cluster Analysis. Journal of Economics Finance and Accounting, 8(4), 184-189.
  • The Banks Association of Turkey (2022), Banking Sector Report 2022. Retrieved from: https://www.tbb.org.tr/en/Content/Upload/Dokuman/1204/Banking_Sector_-_June_2022.pdf
  • Unlu, U., Yalcin, N., & Avsarlıgil, N. (2022). Analysis of Efficiency and Productivity of Commercial Banks in Turkey Pre-and during COVID-19 with an Integrated MCDM Approach. Mathematics, 10(13), 2300-2310.
  • Yildirim, C. (2002). Evolution of banking efficiency within an unstable macroeconomic environment: the case of Turkish commercial banks. Applied Economics, 34(18), 2289-2301.
  • Yilmaz, A. A. (2013). Bank efficiency analysis in Turkish banking system. In WEU International Academic Conference Proceedings, 112-121.
  • Yilmaz, A., & Gunes, N. (2015). Efficiency comparison of participation and conventional banking sectors in Turkey between 2007-2013. Procedia-Social and Behavioral Sciences, 195, 383-392.
  • Zaim, O. (1995). The effect of financial liberalization on the efficiency of Turkish commercial banks. Applied Financial Economics, 5(4), 257-264
There are 49 citations in total.

Details

Primary Language English
Subjects Finance, Business Administration
Journal Section Articles
Authors

Ibrahim Yaglı This is me 0000-0001-8985-0172

Publication Date February 1, 2023
Published in Issue Year 2023

Cite

APA Yaglı, I. (2023). EFFICIENCY ASSESSMENT OF THE TURKISH BANKING SECTOR IN THE PRE- AND DURING COVID-19 PANDEMIC PERIODS. PressAcademia Procedia, 16(1), 26-32. https://doi.org/10.17261/Pressacademia.2023.1660
AMA Yaglı I. EFFICIENCY ASSESSMENT OF THE TURKISH BANKING SECTOR IN THE PRE- AND DURING COVID-19 PANDEMIC PERIODS. PAP. February 2023;16(1):26-32. doi:10.17261/Pressacademia.2023.1660
Chicago Yaglı, Ibrahim. “EFFICIENCY ASSESSMENT OF THE TURKISH BANKING SECTOR IN THE PRE- AND DURING COVID-19 PANDEMIC PERIODS”. PressAcademia Procedia 16, no. 1 (February 2023): 26-32. https://doi.org/10.17261/Pressacademia.2023.1660.
EndNote Yaglı I (February 1, 2023) EFFICIENCY ASSESSMENT OF THE TURKISH BANKING SECTOR IN THE PRE- AND DURING COVID-19 PANDEMIC PERIODS. PressAcademia Procedia 16 1 26–32.
IEEE I. Yaglı, “EFFICIENCY ASSESSMENT OF THE TURKISH BANKING SECTOR IN THE PRE- AND DURING COVID-19 PANDEMIC PERIODS”, PAP, vol. 16, no. 1, pp. 26–32, 2023, doi: 10.17261/Pressacademia.2023.1660.
ISNAD Yaglı, Ibrahim. “EFFICIENCY ASSESSMENT OF THE TURKISH BANKING SECTOR IN THE PRE- AND DURING COVID-19 PANDEMIC PERIODS”. PressAcademia Procedia 16/1 (February 2023), 26-32. https://doi.org/10.17261/Pressacademia.2023.1660.
JAMA Yaglı I. EFFICIENCY ASSESSMENT OF THE TURKISH BANKING SECTOR IN THE PRE- AND DURING COVID-19 PANDEMIC PERIODS. PAP. 2023;16:26–32.
MLA Yaglı, Ibrahim. “EFFICIENCY ASSESSMENT OF THE TURKISH BANKING SECTOR IN THE PRE- AND DURING COVID-19 PANDEMIC PERIODS”. PressAcademia Procedia, vol. 16, no. 1, 2023, pp. 26-32, doi:10.17261/Pressacademia.2023.1660.
Vancouver Yaglı I. EFFICIENCY ASSESSMENT OF THE TURKISH BANKING SECTOR IN THE PRE- AND DURING COVID-19 PANDEMIC PERIODS. PAP. 2023;16(1):26-32.

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