An Empirical Investigation of Operating Costs of banks in the South Eastern European Countries
نویسنده
چکیده
This paper seeks to investigate operating efficiency of the South Eastern European banking sector, an emerging region that has rarely been investigated, over the period 1998-2003 and to examine the relationship between operating costs and various banks’ characteristics. We compile the variables of our model using accounting data. Subsequently, we investigate banking production costs across seven Balkan countries in terms of total operating costs, personnel expenses and physical capital costs. The empirical evidence reveals that South Eastern European banking markets share similar cost structures, while their operating costs have declined over time, verifying that the ongoing restructuring process is heading to the right direction. Moreover, our results reveal a negative relationship between operating efficiency and the ratio of loan loss reserves to gross loans, while, on the other hand, operating efficiency is positively related to the banks’ age. JEL Classification: D24, G21, L25
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