The Merging and the efficiency of banking industry in Iran
Subject Areas : Financial EconomicsHamid Shahrestani 1 , Soghra Ghobadi 2
1 - Faculty Member , Department of Economics, IAU Tehran Science and Research Branch
2 - Graduated(PHD) of IAU Tehran Science and Research Branch
Keywords: Efficiency, Data Envelopment Analysis & Stochastic Frontier Analysis, Linear Planning, Random Frontier Analysis and Competition,
Abstract :
The main goal of this paper is to identify the factors affecting the efficiency of banking industry in Iran. Towards this ends, two methods namely, Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) have been employed to investigate the issue in detail. The data needed for this study covers the period of 1002 to 1002 and are compiled from balance sheets of commercial banks, specialized banks and also from private banks. The results obtained by the application of DEA method indicate that in terms of economic, allocation, and technical consideration, the average efficiency of banking sectors has been in the order of 265, 775 and 715, respectively. In the SFA method, the overall average efficiency of banking system is estimated to be around %45. the results of our model and its coefficient estimates indicate that the efficiency of banking industry is inversely related to the size of the banks, its overall assets and concentration index while factors such as number of bank branches, its skilled and educated labor force, loan to asset ratio, ratio of credit risk to asset, and e-banking index have a positive impact on efficiency index of banking industry. Promotion of efficiency in the banking sectors can be ensured only when the non viable banks are taking over by acquisition or merging practices