Performance Changes Over Difficult Times for the Banking Sector: A Branch Level Study
Advances in Management Accounting
ISBN: 978-1-78743-298-7, eISBN: 978-1-78743-297-0
Publication date: 20 October 2017
Abstract
Purpose: The present study investigates how the performance of Greek bank branching varies when the external environment causes dramatic changes that are reflected in recession and capital control effects.
Design/Methodology: A unique dataset of accounting Profit and Loss statements of retail branches of a systemic Greek commercial bank, closely supervised by the European Central Bank (ECB), is utilized. A profit bootstrap Data Envelopment Analysis (DEA) model is selected to measure the bank branch efficiency. The derived efficiency estimates are analyzed through a second-stage panel data regression analysis against a set of efficiency drivers related to branch profitability, diversification of income, branch size, and branch activity.
Findings: The results indicate that recession negatively affects branch efficiency in the short and long run. The occurrence of recession significantly intensifies the efficiency premium of branch profitability, reduces the efficiency premium of diversification of income (i.e., a negative efficiency effect is recorded during the early recession period), while mitigating the generally negative efficiency effect of branch size. The analysis of efficiency effects from the deep recession period that encompasses capital controls reveals the importance of diversification of income for the improvement of profit efficiency at bank branch level.
Originality/Value: This is the first branch banking study that explores branch efficiency alteration and the dynamic of branch efficiency drivers when the economy suddenly enters recession and afterwards when conditions are becoming extremely difficult and consequently capital controls are imposed on the economy.
Keywords
Acknowledgements
Acknowledgments
I would like to thank the editor (Professor Mary Malina) and two anonymous referees for many valuable suggestions that greatly improved the study. I also thank Sharon Cunningham for her corrections that improved the readability of the manuscript. Finally, I would like to thank participants of the Spring 2016 Conference of the Multinational Finance Society (22–24 April 2016, Cyprus University of Technology, Limassol, Cyprus) for very helpful comments.
Citation
Aggelopoulos, E. (2017), "Performance Changes Over Difficult Times for the Banking Sector: A Branch Level Study", Advances in Management Accounting (Advances in Management Accounting, Vol. 29), Emerald Publishing Limited, Leeds, pp. 183-218. https://doi.org/10.1108/S1474-787120170000029006
Publisher
:Emerald Publishing Limited
Copyright © 2017 Emerald Publishing Limited