Wpływ wielkości banku na jego efektywność: badania dla krajów Europy Środkowo-Wschodniej
The Impact of Bank Size on its Efficiency: Analysis of Central and East European Countries

Summary/Abstract: Although there is a growing body of literature on the impact of bank size on its strategy, efficiency, profitability and stability, the results are still inconclusive. The main advantages of large banks are their capability for product and geographical diversification, ability to bear the cost of technological changes and easier access to financial resources. On the other hand, small banks have a good understanding of local markets, use soft information on their clients more effectively, are based on relationship banking model, and have much simpler organizational structure. The aim of this paper is to analyze the impact of bank size on its efficiency in Central and East European countries. For that purpose, all commercial banks from CEE countries were divided into four groups, depending on their size (expressed in absolute and relative terms). Technical and scale efficiency scores for the period 2004-2013 were calculated using Data Envelopment Analysis. The main conclusion is that in CEE countries bank size affects the efficiency, particularly if the size is expressed in absolute terms. There is a positive relationship between bank size and its technical efficiency (especially above a certain limit). The relationship between bank size and scale efficiency is nonlinear: the smallest and the largest banks have higher scale inefficiency.

• Details
• Contents