Efficiency of the Turkish Banking Sector: A Stochastic Frontier Approach
摘要
This study employs the Stochastic Frontier Approach to estimate bank efficiency for the banks operating in Turkey over the period of 2017 - 2022. The approach applied in this study to modeling bankıng behavior is the intermediation approach, which assumes that banks act as intermediaries between depositors and debtors and transform inputs into outputs. In the input distance function, banks are modeled as multi-product firms that produce three outputs from three inputs. The inputs for banks include labor, physical capital, and loanable funds, while the outputs consist of total loans, off-balance sheet items, and other earning assets. The aim of the study is not only to reflect the state of the banking sector but also to evaluate the Turkish banking sector from several points of view, such as efficiency comparison between bank ownership (foreign, private, state), bank orientation (conventional, Islamic), listing status (listed, unlisted) and bank size. Additionally, this study also assesses the impact of extraordinary conditions (macroeconomic environment impacted by the Coronavirus pandemic) on the efficiency of the banks. The results indicate that a certain amount of bank resources is underutilized during the intermediation of banking services implying management can improve efficiency by better control of inputs and outputs. Another noteworthy finding is that Islamic banks are less efficient, while domestic private banks and state-owned banks are more efficient than foreign banks. Additionally, the results indicate that bank size, listing status, and pandemic have an impact on bank efficiency.