External Two Stage DEA Analysis of Bank Efficiency in West Balkan Countries

Since the beginning of application Data Envelopment Analysis (DEA) model in various areas economy, it has found its wide field finance, more specifically banks, last few years. The focus this research was to determine sustainability intermediate function especially recent years when interest rates on deposits have been at a minimum level. divided into two parts, wherein first part determined efficiency banks countries Western Balkans period from 2015 2019. second approached regression analysis which we influence bank size, type bank, and mergers acquisitions (M&A) activity defined efficiency. In stage applied output-oriented DEA using deposits, labor costs, capital as input variables; other side, used loans investments output variables. We data revised financial statements operating Serbia, Bosnia Herzegovina, Montenegro, North Macedonia, Albania. results our study showed that there is difference levels between within considered time period. Furthermore, Tobit significant negative M&A relative technical positive relationship size These findings suggest large commercial can sustain West Balkan market. It be expected less efficient small will taken over by banks.