Estimation of banking efficiency determinants in the Czech Republic
Estimation of banking efficiency determinants in the Czech Republic

Summary/Abstract: The aim of this paper is to estimate the banking efficiency determinants of the Czech commercial banks during the period 2001-2013. For estimation of banking efficiency we applied the Data Envelopment Analysis on data of the Czech commercial banks. We simultaneously use two alternative specifications of Data Envelopment Analysis approach, specifically CCR model and BCC model that differ in returns to scale assumption. The determinants of banking efficiency were estimated using the panel data analysis. The results of the paper show that the level of capitalization, credit risk, liquidity risk and riskiness of portfolio had a positive impact on banking efficiency. Gross domestic product per capita had a negative impact on banking efficiency. We found that in BCC model, the liquidity risk and riskiness of portfolio had a positive impact on efficiency in the Czech banking sector. Other determinants were not statistical significant in this model. Banks with a higher ratio of loans to deposit, ratio of loans to assets, higher ratio of equity to total assets were more efficient than other commercial banks in the Czech banking sector. The impact of the ownership structure was not statistical significant during the analyzed period.

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