Evaluating Banking Efficiency in Argentina

Buenos Aires

Jornada; 32º JAIIO (Jornadas Argentinas de Informática e InvestigaciónOperativa) ? SIO 2003 (Simposio de Investigación Operativa); 2003

This paper assesses the efficiency of the Argentine Banking System. 11 public and 39 private banks were considered. Data of the year 2001 were used. Data Envelopment Analysis (DEA) nonparametric methodology was applied. 3 input and 2 output variables were defined. In order to select the most suitable DEA model, the CCR and BCC models were applied to verify the prevailing type of return to scale in the system. The BCC method oriented to outputs was adopted. Banks were classified on the basis of their size by means of Hierarchical Cluster Analysis. The effect on efficiency indexes of factors such as capital origin and bank size was analyzed. Conclusions are drawn regarding how these attributes affect banking efficiency.