Efficiency of the Czech Banking Sector Employing the DEA Window Analysis Approach

Abstract

The aim of this paper is to apply the Data Envelopment Analysis (DEA) window analysis on the data of the Czech commercial banks and to examine the efficiency of the Czech banking sector during the period 2003–2012. The paper employed an extended DEA approach, specifically DEA window analysis for the efficiency assessment of commercial banks in the Czech Republic. It is based on panel data for the period from 2003 to 2012. Data Envelopment Analysis has become a popular approach in measuring the efficiency of banking industry. We use the DEA window analysis based on an input oriented model to measure banking efficiency. In the analysed period, the average efficiency under constant return to scale reached 70–78% and average efficiency under variable return to scale reached 84–89%. The most efficient bank was GE Money Bank and the lowest efficient bank was Československá obchodní banka. The group of large bank (Československá obchodní banka, Česka spořitelna and Komerční banka) was lower efficient than other banks in the banking industry. The reasons of the inefficiency of the group of large banks were the excess of deposits in balance sheet and inappropriate size of operation.