Analysis of banking efficiency in portugal

Analysis of banking efficiency in Portugal
Comparative analysis between portuguese banks and foreign banks operating in Portugal in
2009 and 2010
Ana Margarida Brochado
Abstract

Ana Margarida Ribeiro

Methodology

The Portuguese banking sector has seen several transformations :

Data Envelopment Analysis (DEA)
Input-Oriented

Before April 25, 1974: appears the Bank of Portugal, in 1846 with status mostly private; Nationalizations after April 25, 1974;
Acession to the European Community in 1986 and consequent strong banking sector liberalization process;
Entry on the Economic and Monetary Union and adoption of the single currency
(Euro) in 1999, which entered into service in 2002;
Recent crisis and recession.

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Raquel Fardilha

The Portuguese banking sector has been recently subjected to important structural changes associated with the diversification of the supply of financial services and the e mergence of new technologies. Furthermore, news challenges have arrived from the actual economic recession scenario. This study aims at investigating the efficiency performance of the commercial banking sector in Portugal in 2009 and 2010. Moreover, we intend to compare the obtained results with previous studies. A second objective of this paper is to quantify the relative efficiency of domestic banks as compared to that of foreign banks. Data envelopment analysis is used to identify banks’ levels of performance. In order to test for differences of efficiency scores between national and foreign banks hypotheses tests were used. We found an improvement on technical and scale efficiency from 2009 to 2010. Our results also revealed that foreign banks were more efficient both in 2009 and 2010 than national banks. The results should be of interest to management in banking and others studying bank performance trends.

Introduction

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Mariana Loureiro

Minimize Inputs
Labour Costs

Analyse the efficiency of banks that