Acta Univ. Agric. Silvic. Mendelianae Brun. 2015, 63, 1847-1858
Published online 2015-12-26

A Slacks-based Measure DEA Methodology for Identification of Returns to Scale in the Slovak Banking Sector

Martin Boďa

Department of Quantitative Methods and Information Systems, Faculty of Economics, Matej Bel University in Banská Bystrica, Národná 12, 974 01 Banská Bystrica, Slovak Republic

Taking into consideration that knowing the nature of scale of operations is important both to size optimization and to technical efficiency measurement, the paper aims to identify for individual commercial banks of the Slovak banking sector the scale of their operations as exhibited by their production activities during the period from 2000 and 2012. To this end, the DEA procedure of Tone and Sahoo utilizing the concept of the degree of scale elasticity is enhanced and combined with the framework of the SBM model. The analysis of scale is conducted for the major 11 Slovak commercial banks under the prism of the production approach to banking operations, in which the economic assumption that three solid phases can be singled out in the development of the Slovak banking sector is made. The results confirm that the largest Slovak commercial banks were in the investigated period already “too large” so as to gain potentially some benefit from expanding their depository and creditory services by increasing their inputs.


The paper is prepared under the aegis of the grant scheme VEGA No. 1/0757/15 Augmentation of the theoretical construct of the SCP paradigm and of the efficient structure hypothesis in banking and insurance by the aspect of risk and their empirical validation in the conditions of the Slovak Republic and under the project ITMS 26110230082 Mobility – Support of Science, Research and Education at Matej Bel University in Banská Bystrica (Mobility – podpora vedy, výskumu a vzdelávania na UMB) within the bounds of financial subsidy contract No. 018/2012/1.2/OPV.


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