Erjola BARBULLUSHI (SAKTI)
University of Shkodra “Luigj Gurakuqi”, Economic Faculty, Finance-Accounting Department,Sheshi 2 Prilli, Rektorati, postal code 4001, Shkoder, Albania esakti@unishk.edu.al (corresponding author)
Orfea DHUCI
University of Tirana, Faculty of Economy, Finance Department, Rr. Elbasanit, Tirane, Albania odhuci@alpha.grAbstract
For performance evaluation purposes of economic entity one should consider different aspects of its activity. In case of banks this objective is quite difficult since they offer a wide range of services and the activities performed are such complex. Researchers all over the world have adopted different approaches and techniques for bank evaluation from different point of view: from shareholder`s or regulators. From the literature review we cannot observe the most preferred approach implemented for this purpose. Last years the economic models , parametric and non-parametric approaches have gained much interest in the field. In this study we propose a non-parametric approach for bank evaluation known as Data Envelopment Analysis (DEA). Shortly, here in it is presented the DEA background and its development from the original work of Charnes, Cooper and Rhodes (1978), followed by a literature review on the implementation of this approach in the banking sector in the region and more. Third, there are discussed some important issues on adoption of DEA in banking sector followed by its implementation in Albanian Banks for 14 out of 16 banks, for the period from 2006-2013. We found that larger and smaller size banks can be either efficient and the inefficiencies are found also from different capital ownership.
Keywords: efficiency, DEA, production approach, CRS, VRS, Albanian banks
JEL classification: G210
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