Proceedings of the 11th International Academic Conference, Reykjavik

A COMPARISON OF THE FINANCIAL EFFICIENCIES OF COMMERCIAL BANKS AND PARTICIPATION BANKS: THE CASE OF TURKEY

MELEK ACAR BOYACIOGLU, IBRAHİM EREM SAHIN, RAMAZAN AKTAS

Abstract:

The purpose of this study is to measure the efficiencies of participation banks, which conduct interest-free banking transactions, and commercial banks within the Turkish finance system and determine whether they have made progress in a year-by-year process or not. In this context, using the continuous financial data between the years 2011 and 2013 belonging to 4 participation banks and 16 public and private commercial banks operating in the banking sector, efficiencies of the banks were measured through the Data Enveloping Analysis and whether or not there was progress in their efficiency on a yearly basis was investigated using the Malmquist Total Factor Productivity Index. According to the results of the analysis conducted using input-output components by adopting the mediation approach, although the efficiency levels of the banks exhibited a slight drop by the years, an increase was observed in their total factor productivities. When the efficiency scores of commercial banks and participation banks are evaluated within themselves, it is seen that with the exception of 2013, the mean efficiency values of participation banks are higher than the mean efficiency values of commercial banks.

Keywords: Participation Banks, Commercial Banks, Turkish Banking Sector, Data Envelopment Analysis, Malmquist Total Factor Productivity Index, Efficiency.

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