Impact of the Financial Crisis on Banking Efficiency: Evidence from Romania
Impact of the Financial Crisis on Banking Efficiency: Evidence from Romania

Summary/Abstract: In this paper, we use a non-parametric approach to examine the efficiency of banks from Romania, during a ten-year period, from 2003 to 2012. We limit our sample to this period in order to observe the dynamics of efficiency before and after the financial crisis. We develop an empirical model that involves estimating bank efficiency. In order to measure the efficiency growth of the banking industry, we calculate Malmquist index using a nonparametric linear programming approach.Our results suggest that during the first period under study (2003-2008), the banks from Romania have been more efficient, mainly because of the integration in to European Union. In the second period (2009-2012), financial crisis took its toll on banking efficiency even though banks have attempted to reduce personnel costs.

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