Performance Analysis and Benchmarking of Commercial Banks Operating in Bosnia and Herzegovina: a DEA Approach

• Authors: Deni Memić , Selma Škaljić-Memić
• Languages of publication: EN

Abstracts

EN

Background: During the last four years, the banking sector in Bosnia and Herzegovina has been facing crisis which has caused the stagnation within the sector. Still, the results within the sector vary to a great extent from bank to bank. Objectives: The efficiency score is assessed for each bank and serves as a basis for further comparisons between banks in the period between 2008 and 2010. Methods: A modified model of Data Envelopment Analysis (DEA) has been used in order to combine several financial indicators simultaneously in a unique efficiency measure. The model provides a rounded judgement on a bank's relative efficiency. Results: Efficiency of individual banks varied throughout the observed period and not all of the banks were a part of the negative banking sector trend induced by the crisis. There is no significant difference between performance of banks in different entities of Bosnia and Herzegovina, and between smaller and larger banks. Conclusions: The results of the study can be used by bank managers to assess the performance of their banks, as observing financial ratios separately can result in a misleading conclusion. The most valuable practical implications of the findings are the provided feasible targets for the three observed years.

Keywords

EN

Banks; efficiency; Data Envelopment Analysis; financial ratios; Bosnia and Herzegovina

• Publisher: Sciendo
• Journal: Business Systems Research Journal
• Year: 2013
• Volume: 4
• Issue: 2
• Pages: 17-37

Dates

published

2013-12-01

online

2014-01-22

Contributors

author

Deni Memić

• Sarajevo School of Science and Technolocy, Economics Department, Sarajevo, Bosnia and Herzegovina & Hypo Alpe Adria Bank d.d. Mostar, Bosnia and Herzegovina

author

Selma Škaljić-Memić

• Centralna Banka Bosne i Hercegovine, Sarajevo, Bosnia and Herzegovina

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Identifiers

DOI

10.2478/bsrj-2013-0010