بازده های فنی، مقیاسی و تخصیصی صنعت بانکداری ترکیه
|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|18234||2002||48 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Banking & Finance, Volume 26, Issue 4, April 2002, Pages 719–766
This paper investigates input and output efficiency in the Turkish banking industry to understand the impact of size, international variables, ownership, control and governance on profit, cost, allocative, technical, pure technical and scale efficiency measures. Employing a non-parametric approach along with a parametric approach, we estimate the efficiency of Turkish banks over the 1988–1996 period. This period allows us to account for the changes in the macro economy and regulatory treatment of the Turkish banking industry over time. Our results suggest that the heterogeneous characteristics of banks have significant impact on their efficiency. Moreover, cost and profit efficiencies of the Turkish banks have exacerbated over time. Results also indicate that the dominant source of inefficiency in Turkish banking is due to technical inefficiency rather than allocative inefficiency, which is mainly attributed to diseconomies in scale. To the extent that they chose an inefficient level of production, bank management is responsible for scale inefficient operations. However, increasing demand for banking services in the nineties, fueled by the state's increasing demand for funds to finance chronic budget deficits and high growth policies, and the oligopolistic nature of the Turkish banking market do not justify scale adjustments. Our policy suggestions are that the government implement financial reform packages that foster competition in the banking market, and that the industry devise incentive schemes to improve managerial efficiency.
In a rapidly changing financial market worldwide, bank regulators, managers, and investors are concerned about how efficiently banks transform their expensive inputs into various financial products and services. According to Berger et al. (1993), although rapid changes in the financial services industry have been taking place all around the globe, the efficiency research has not kept pace with these changes, in terms of both maturity and breadth. In their recent excellent international survey paper, Berger and Humphrey (1997) also underscored the imbalance of the focus in the literature after reviewing 130 frontier (X-) efficiency studies from 21 countries and various types of financial institutions. They reported that the vast majority of the studies on banking efficiency focus on the banks of developed countries in general (about 95%) and of the US in particular (about 70%). While giving possible directions for future research, both survey studies suggest that more research is needed in measuring and comparing the efficiency of banks and other financial institutions from different countries. The economic and political environments surrounding financial institutions differ substantially across countries. For research and policy purposes, results from banking markets that are more national in scope with much higher levels of concentrations may shed some light on the efficiency impact of various regulatory policies. During the last two decades, there were continuous legal, structural and institutional changes in the Turkish financial sector. A series of economic reforms were introduced in the 1980s to establish a free market economy and promote financial market development. With these reforms, interest and foreign exchange rates were freed, and new financial products and institutions were permitted. The Interbank Money Market and Istanbul Stock Exchange (ISE) were established in 1986 to provide liquidity in the financial system. As a reflection of internationalization policies, foreign banks, joint ventures and partnerships between domestic and foreign banks were also welcomed to the system. Also, Turkish banks took an interest in doing business abroad and began operating in international markets. Turkey's determination for a permanent membership in the European Union motivated its banking authorities to ensure that their regulations are in harmony with those in the Union. Turkey has already accepted EU practices on capital adequacy and adjusted its customs and tariffs according to a mutual agreement with the EU. A changing and distinct market structure, with a rich variety of organizational and ownership types, presents an opportunity to examine efficiency differences among different forms of banks in Turkey. In comparison with their North American and Western European peers, Turkish banks do not face any serious competition from non-bank companies because most of the insurance, factoring, leasing, and brokerage companies are affiliated with banks through a holding company structure encompassing financial and non-financial entities. Since the universal-banking system is in effect in Turkey, banks undertake most of the activities in both capital and money markets. The banking industry that dominates the entire financial system has recorded phenomenal earnings in recent years. At times in the 1990s, the return on asset ratio in Turkish banking sector has been as high as five times the OECD average (Denizer, 1997). Moreover, Turkish banks have been getting much higher returns than industrial firms (Zaim, 1995).2 Traditional banking activities tended to disappear as a result of increasingly more profitable arbitrage activities, much of which revolves around the management and funding of large portfolios of government securities, which have been the highest yielding asset in Turkey in recent years. More strikingly, as a result of their extraordinary activities in government papers, an increasing number of industrial firms' non-operating income has surpassed the income from their core operations. In this still mixed economic system, publicly and privately owned banks operate side by side. That is, aside from its regulatory power and interference in the system, the state also occupies a prominent place in banking. As of 1996, the state controls about 43% of the total banking assets. Although most of the banks are young and small, one foreign bank, the Ottoman Bank, is as old as 144 years and a domestic public bank, the T.C. Ziraat Bank, accounts for about 25% of all commercial banking assets.3 There are no local banks in Turkey and all banks are multi branched. All types of individual deposits (TL or foreign exchange denominated) are fully insured. 4 In spite of continuous efforts to foster competition among economic units in the recent decades, the Turkish banking industry still seems to suffer from oligopolistic competition. It would probably take over 1000 banks to account for 70% of the US bank assets, but it takes only the 10 largest banks to account for that share of the Turkish bank assets.5 However, especially since the financial reforms, the Turkish banks have been operating in an increasingly competitive market. Existing banks have faced stiff competition not only from new domestic banks but also from foreign banks. Banks began to shut down their unprofitable branches and/or reduce branch sizes by laying-off redundant employees. In a perfectly competitive and contestable financial market, inefficient banks will be driven out or acquired by efficient banks. Thus, to augment competitive viability of banks in the new regulatory environment, it is imperative for bank managers and regulators to determine the level and causes of inefficiency in the banking industry. There have been a few studies on Turkish banking efficiency. Oral and Yolalan's (1990) DEA study measures operating efficiency and profitability of branch offices of a major domestic commercial bank. Fields et al.'s (1993) non-frontier translog cost function study focuses on scale economies of national commercial banks between 1987 and 1988. They showed that a bank does not have to be large in order to be competitive from a cost perspective, a finding that is similar to those of the earlier studies from developed countries. Altunbas et al.'s (1994c) stochastic cost frontier study focuses on inefficiency differences mainly between public and private banks during the period 1991–1993, and reported no strong inefficiency differences between public and private banks. Zaim's (1995) DEA frontier study investigates the impact of the financial reforms introduced in the early 1980s on Turkish bank efficiency. His results suggest that Turkish banks experienced improved efficiency in a more liberalized banking environment, which resulted in improved technical and allocative efficiencies in 1990 with respect to those in 1981. Our paper differs from other Turkish banking papers in several respects. First, unlike other studies, we estimate five different measures of non-stochastic efficiency scores such as allocative efficiency, technical efficiency, pure technical efficiency, scale efficiency and overall cost efficiency. Second, we also calculate stochastic cost and alternative profit efficiencies of the Turkish banks, and compare the results across methods and other studies on Turkish banking. This study is the first that measures and analyzes the profit efficiency of Turkish banks. Third, we estimate and report returns to scale for all Turkish banks according to various size measures during the post liberalization period. Fourth, unlike other studies, we correlate four measures of financial performance with five measures of cost efficiency to investigate whether higher financial performance impact bank cost efficiency. Fifth, we also investigate the impact of size, international presence, control and governance, holding affiliation as well as ownership variables on the Turkish bank efficiency scores. Finally, unlike other studies, we include off-balance sheet activities, inter-bank funds, directed lending, and investment security portfolios, which are significant in volume, in estimation of the efficiency measures. This paper is divided into five parts. Following the introduction, Section 2 presents the methodology and data. The point estimates of various efficiency measures and sample statistics of the inputs, outputs and input prices are discussed in this section. Section 3 provides the empirical results and analyzes the inefficiency of the banks by tracing their major sources. We also discuss the returns to scale in Turkish commercial banking, and test whether efficiency measures are statistically correlated with simple traditional accounting ratios of financial performance. Section 4 examines the relationship between efficiency and bank characteristics. Section 5 concludes the paper.
نتیجه گیری انگلیسی
Employing both parametric and non-parametric methods, we estimate the cost and profit efficiencies of Turkish banks over the 1988–1996 period to study the impact of different ownership and organizational structures on efficiency of Turkish banking sector. Over the years under study, we find that the overall cost and profit efficiencies for the Turkish banks are 72% and 83%, respectively, implying that on average, about 40% of the bank resources and about 20% of the potential bank profits are wasted during the production of banking services. The results also indicate that the production efficiencies of the industry consistently fell over time, which seems to have resulted from increases in the cost of funding and growth of the banks in the recent years. The mean efficiency measures that we find for the industry in general, and for the private banks in particular, are higher than those reported in earlier studies on Turkish bank efficiency. We attribute this finding mainly to the inclusion of the omitted factors in other studies such as off-balance sheet activities, repo transactions, inter-bank funds, and lending to special sectors. We also decompose the overall cost efficiency into its allocative and technical efficiency components. The results suggest that the dominant source of the cost inefficiency in the Turkish commercial banking sector is due to technical inefficiency rather than allocative inefficiency. While regulation is typically given as a major source of allocative inefficiency, poor management is usually associated with technical inefficiency. Relatively higher technical efficiency implies that the competitive viability of the Turkish commercial banks depends, to a great extent, upon improved managerial efficiency. However, further analysis suggests that most of the observed technical inefficiencies are due to operating at incorrect scales rather than operating off the efficient frontier. To the extent that it involves the choice of an inefficient level, scale inefficiency can be considered a form of managerial inefficiency. The period of our study corresponds to the period of revival of growth in commercial banking that seems to have encouraged the over-branching and over-staffing problems of the pre-1980s. Accordingly, the results show that the Turkish banks have increasingly experienced diseconomies of scale and most of the scale inefficient banks suffer from “transgressing” the optimum size. Consequently, the banks in our sample tend to incur nontrivial production costs due to scale inefficiency, which seem to be associated more with being at a size greater than the optimum. Although efficiency gains could be realized by reducing production levels, the excess demand for banking services, induced by the state's high growth polices in recent years, does not justify it. The oligopolistic structure of the Turkish banking industry and the increased demand for banking services have sustained managerial inefficiency, despite the reform agenda undertaken in the 1980s to achieve greater competition in the Turkish economy. A second-stage correlate of efficiency analysis suggests that the relationship between bank size and efficiency is strongly negative. While small banks compete with large banks primarily in metropolitan markets, they do not compete in rural markets. Thus, strong competition might have induced more market discipline on small banks, leading to greater cost efficiency. Unlike their counterparts in the US, foreign banks operating in Turkey seem to be significantly more efficient than their domestic peers. The local market conditions in Turkey provide some opportunities for foreign banks to utilize their comparative advantages in addition to their relatively minor scale problems, which appears to be a major problem for the domestic banks. In general, private banks are found to be more efficient than public banks in terms of all types of efficiency. We also find a strong association between X-efficiency and management-team structure. Our results indicate that banks where the board is independent of management are significantly more efficient than those banks with the same management and board. In addition, publicly traded banks, which are exposed to more market discipline, are found to be more technically efficient than privately held banks. Banks operating under a holding company structure outperform the independent banks in terms of efficiency. Although multinational domestic banks seem to be more efficient than pure domestic banks, their efficiency differential does not appear to be significant.