An efficiency analysis of European banks considering hierarchical technologies

Abstract

This article, introduces the notion of hierarchical technologies in measuring banking efficiency, which arise from type- and country-specific characteristics of European banks. Adopting a meta-metafrontier framework, efficiency and technology gaps are measured for a sample of commercial, savings and cooperative European banks. In a hierarchical setting of banking technologies, the results reveal significant technology gaps among national banking systems, while minor technology gaps are identified among bank types within each country.

Keywords:

• efficiency
• technological heterogeneity
• banking
• data envelopment analysis

JEL Classification:

• C67
• D24
• G21

Acknowledgment

The author would like to thank Kostas Tsekouras for his helpful comments and suggestions.

Notes

¹ For formal definitions of technological and metatechnological sets, see, for example, Kontolaimou and Tsekouras (2010).

² The relevant results are available upon request.