Abstract
The article analyzes the profit efficiency of the Ukrainian banks by means of a constructed model of stochastic efficiency frontier on the basis of intermediary approach. For constructing of the trans-logarithmic function for the efficiency frontier, the concept of alternative profit efficiency was applied. We used the value of fixed assets, labor costs, the cost of loan capital as input variables, whereas output variables were: issued loans, other assets and total costs. The analysis of the profit efficiency of the Ukrainian banks in 2015 and 2016 pointed out to a number of serious problems in the domestic banking sector. Primarily, the system’s average efficiency in general was quite low and constituted only 0.31. Of particular concern is actually the zero efficiency of the Ukrainian state-owned banks. In contrast to the latter and subsidiaries of foreign banking groups the Ukrainian banks with private capital have showed a slightly higher level of profitability over the analyzed period.
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