Grigorian, David A.Manole, Vlad2013-08-052013-08-052002-06https://hdl.handle.net/10986/14792Banking sectors in transition economies have experienced major transformations throughout the 1990s. While some countries have been successful in eliminating underlying distortions and restructuring their financial sectors, in some cases financial sectors remain underdeveloped and the rates of financial intermediation continue to be quite low. The authors estimate indicators of commercial bank efficiency by applying a version of Data Envelopment Analysis (DEA) to bank-level data from a wide range of transition countries. They further extend the analysis by explaining the differences in efficiency between financial institutions and countries by a variety of macroeconomic, prudential, and institutional variables. In addition to stressing the importance of some bank-specific variables, the censored Tobit analysis suggests that: 1) Foreign ownership with controlling power and enterprise restructuring enhance commercial bank efficiency. 2) The effects of prudential tightening on the efficiency of banks vary across different prudential norms. 3) Consolidation is likely to improve efficiency of banking operations. Overall, the results confirm the usefulness of DEA for transition-related applications and may shed light on the optimal architecture of a banking system.en-USCC BY 3.0 IGOTRANSITION ECONOMIESDATA ANALYSISBANKING SYSTEMSFINANCIAL SECTOR REFORMFINANCIAL INTERMEDIATIONFINANCIAL INDICATORSFINANCIAL INSTITUTIONSMACROECONOMICSPRUDENTIAL REGULATIONSINSTITUTIONAL FRAMEWORKENTERPRISE RESTRUCTURINGFOREIGN OWNERSHIP ACCOUNTINGACCOUNTING STANDARDSADVERSE EFFECTSAUDITINGBALANCE SHEETBANK ASSETSBANK CLOSURESBANK MANAGEMENTBANK PERFORMANCEBANK REGULATORY AGENCIESBANKING INDUSTRYBANKING SECTORBANKING SERVICESBANKING SYSTEMBANKING SYSTEMSBANKRUPTCYBANKSBENCHMARKCAPITAL ADEQUACYCAPITAL MARKETSCAPITALIZATIONCOMMERCIAL BANKSCONSOLIDATIONCONSTANT RETURNS TO SCALECORPORATE GOVERNANCECOST FUNCTIONSDATA ENVELOPMENT ANALYSISDECISION MAKINGDEMAND DEPOSITSDEPOSIT INSURANCEDEPOSITORSDEPOSITSDEVELOPED COUNTRIESEARLY WARNING SYSTEMSECONOMIC GROWTHECONOMIES IN TRANSITIONECONOMIES OF SCALEEMPLOYMENTEXPENDITURESFINANCIAL DATAFINANCIAL INDICATORSFINANCIAL INSTITUTIONSFINANCIAL INTERMEDIARIESFINANCIAL INTERMEDIATIONFINANCIAL LIBERALIZATIONFINANCIAL REFORMSFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFINANCIAL SERVICESFOREIGN EXCHANGEGDPGDP PER CAPITAGROWTH RATEGUIDELINESIMPERFECT COMPETITIONINFLATIONINSTITUTIONAL DEVELOPMENTINSTITUTIONAL ENVIRONMENTINSURANCEINTEREST INCOMEINTEREST RATESLIQUID ASSETSLIQUIDITYLIVING STANDARDSLOAN CLASSIFICATIONLOAN LOSS PROVISIONSMACROECONOMIC STABILIZATIONMARKET ECONOMIESMONETARY AUTHORITIESMORAL HAZARDOPERATING EFFICIENCYOPPORTUNITY COSTPER CAPITA INCOMEPOLICY INSTRUMENTSPRIVATIZATIONPRODUCTION FUNCTIONPRODUCTIVITYPRODUCTIVITY GROWTHPROFIT MAXIMIZATIONPROFITABILITYPRUDENTIAL REGULATIONSPRUDENTIAL REQUIREMENTSPURCHASING POWERREAL SECTORRESOURCE ALLOCATIONRISK MANAGEMENTSAVINGSSECURITIESSECURITIES MARKETSSMALL BANKSSTATE OWNERSHIPSTOCK MARKETST-BILLSTIME DEPOSITSTRADE LIBERALIZATIONTRANSITION ECONOMIESUNDERESTIMATESVALUE ADDEDWorld Bank10.1596/1813-9450-2850