Empirical Evaluation of the Efficiency of Ecuadorian Banking Sector

Keywords: Efficiency, Banking System, Data Envelopment Analysis, Decision-Making Units, DEA.

Abstract

This research constitutes the measurement of the efficiency of the Ecuadorian banking sector during the periods 1993-1999 and 2000-2018, applying the Data Envelope Analysis methodology, using the CCR and BCC approaches. The fixed asset and operating expense accounts were used as input variables for this purpose. The output variables were accounts receivable, income, investments and total deposits. Data were taken from monthly bulletins submitted by the different decision-making units to the Superintendencia de Bancos del Ecuador. The main findings indicate that the levels of efficiency during the 2000-2018 period were higher than in the 1993-1999 period. On average, during the first period, the banks had an efficiency ratio of 74.31%, according to the CCR approach, and 82.17%, according to the BCC approach. However, the efficiency levels during the second period reached 95.43% and 97.01%, respectively. In addition, the results show that large banks have a higher level of efficiency than smaller banks. However, medium-sized banks have the lowest level of efficiency. It should be noted that the data varies when analyzed according to the CCR approach. Furthermore, efficiency levels are generally associated with factors related to the country’s situation. This research is presented as one of the first studies on the analysis of efficiency in the Ecuadorian banking sector using this method.

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Author Biographies

Jorge Arturo Campoverde Campoverde, Universidad de Cuenca. Ecuador.

Coordinator of the Business Research Group. Master’s degree in Business Administration. Principal Investigator and Professor of Operations Research at the Universidad de Cuenca. Ecuador.

Gustavo Giovanni Flores Sánchez, Universidad de Cuenca. Ecuador.

Investigator and professor of finance management at the Universidad de Cuenca. Ecuador. 

Katherine Tatiana Coronel Pangol, Universidad de Cuenca. Ecuador.

Junior Investigator in the Business Research Group at the Universidad de Cuenca. Ecuador.

Carlos Armando Romero Galarza, Universidad de Cuenca. Ecuador.

Junior Investigator in the Business Research Group at the Universidad de Cuenca. Ecuador.

Published
2020-06-04
How to Cite
Campoverde Campoverde, J. A., Flores Sánchez, G. G., Coronel Pangol, K. T., & Romero Galarza, C. A. (2020). Empirical Evaluation of the Efficiency of Ecuadorian Banking Sector. Harvard Deusto Business Research, 9(1), 20-39. https://doi.org/10.3926/hdbr.256
Section
Articles