Are Ecuadorian banks enough technically efficient for growth? A clinical study

No Thumbnail Available
Publication date
Reading date
Event date
Start date of the public exhibition period
End date of the public exhibition period
Authors of photography
Person who provides the photography
Journal Title
Journal ISSN
Volume Title
Research Projects
Organizational Units
Journal Issue
In this article, we estimate the technical efficiency ratio for a sample of 24 financial institutions in Ecuador over the period 2015–2019. To do so, we first apply a non-parametric method such as the data envelopment analysis (DEA). Under variable returns to scale and output-oriented “Interest Income”, the average technical efficiency for the 24 banks is 84.26% and, under output-oriented “Other Operating Income”, the average technical efficiency is 73.22%. We find that the group of large banks has higher levels of efficiency and that there are still opportunities for improvement in the group of medium and small banks. We also estimate that 80% of Ecuadorian banks need to make potential improvements either by increasing their output or reducing their inputs, such as salary costs, to increase the efficiency. In addition, the growth of the banking sector is crucial to achieve the financial development in Ecuador, being significant the efficiency indices, which show that a 1% increase in banking efficiency could increase its size by USD 605 million. By using the random effects panel data econometric model, we demonstrate that the growth of the banking industry is mostly influenced by the concentration of deposits and taxes.
Doctoral program
Related publication
Research projects
Bibliographic reference
Int J Fin Econ; 2023; p. 1–19.
Photography rights