Efficiency analysis of Macedonian and Croatian banking sectors with DEA

Violeta Cvetkoska; Katerina Fotova Čiković

doi:10.47063/ebd.00003

Violeta Cvetkoska Faculty of Economics- Skopje
Katerina Fotova Čiković Sveučilište Sjever

Keywords: banking sector, relative efficiency, DEA, BCC, developing countries

Abstract

The aim of this paper is to measure and analyze the relative efficiency of commercial banks in two developing countries, the Republic of North Macedonia and the Republic of Croatia by using the leading non-parametric methodology for measuring performance, data envelopment analysis (DEA). We follow Banker et al. (2010) in the selection of variables and the model. We have applied the output-oriented BCC DEA model on a sample of 14 Macedonian and 20 Croatian commercial banks in the period from 2015 to 2019. Outliers are identified and excluded by using the Banker and Gifford (1988) super efficiency procedure, and the BCC output-oriented model is rerun with a sample of 11 Macedonian and 19 Croatian bank. We provide relative efficiency scores for each bank in both sectors, as well as an average score for the banking sectors. In addition, we analyze few banks for both sectors that have decreased or increased the efficiency, or show variable results over time. Besides, we explain how inefficient banks can improve the efficiency in future by setting targets for improvement. Our study provides valuable information for banking management and regulatory bodies.

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Author Biography

Violeta Cvetkoska, Faculty of Economics- Skopje

Violeta Cvetkoska is an Associate Professor on the courses: Operational research
and Fundamentals of business analytics at “Ss. Cyril and Methodius” University in
Skopje, Faculty of Economics – Skopje. She works at the Faculty of Economics –
Skopje since December 2007, first as a Junior Teaching Assistant, then as
Assistant and Assistant Professor.
She graduated at the Faculty of Economics – Skopje as best student on the
Department of Management in 2007; got her Master’s degree at the Faculty for
Organizational Sciences at the University in Belgrade on the Operations
management program in 2010. Her doctoral dissertation titled: “Methods and
models for multi-criteria decision making in management: Empirical study for
evaluating the efficiency on certain organizational units in the Republic of
Macedonia” was successfully defended on 12.06.2013 at the Faculty of Economics
– Skopje, that enabled her to get the scientific level of PhD in the Economic
sciences.
She is the author of the published book: Applying multi-criteria decision making
methods in banking: The case of Komercijalna Banka AD Skopje. Also, she has
published various scientific papers in International journals and Proceedings of
International conferences and symposia.
She has participated continuously in national and international trainings, seminars,
workshops, conferences, symposia and summer schools that have important impact
on her professional development. In addition, special contribution for developing her
academic carrier have her study and scientific visits in Universities in Europe, North
and South America and Asia.
She contributes important roles as member in organizational boards especially for
significant national and international conferences and summer schools. Also, she is
a reviewer in several international journals and part of Editorial board.
She works on different projects and she is a member of several international
societies and work groups of EURO.
Her area of scientific interest are: Management science / Operational research,
Decision science, Quantitative analysis for management, Data science, Business
analytics, Mathematical programing (DEA) and Multi-criteria models and methods
for business decision making.