Measuring the Relative Efficiency of Bank Branches: The Case of the Agricultural Bank of Greece
Pp. 143-154 (12)
Anthony N. Rezitis, Alexande Pailas and Maria A. Kalantzi
This paper investigates the relative efficiency of a sample of 19 bank branches of the Agricultural Bank
of Greece for the years 2002 and 2003 by using data envelopment analysis. The present study uses the
intermediation approach to define bank inputs and outputs. The empirical results indicate that 36.8% of the bank
branches operated fully efficiently in both years. In addition, the results indicate that for the input-oriented DEA
the mean efficiency levels are 81.9% and 79% for the years 2002 and 2003, respectively, while for the outputoriented
DEA the mean efficiency levels are 129.9% and 135.7% for the years 2002 and 2003, respectively. The
efficiency performance is also related to the profitability performance. It is found that several bank branches
operated at low efficiency levels and meliorated profitability standards. Another issue that is analyzed is the
procedure for changing the levels of inputs and outputs to increase the branching efficiency. The results indicate
that the branching efficiency can be increased by reducing loans whose payback is delayed for over 180 days.
Finally, a sensitivity analysis is performed, which indicates that efficiency is rather more sensitive to loans whose
payback is delayed for over 180 days and to commission fees and other non-interest incomes.
Bank branches, efficiency, DEA, sensitivity analysis.
Department of Business Administration of Food and Agricultural Enterprises, University of Western Greece, 2, G Seferi St, Agrinio, Greece