Efficiency of the building societies in the Czech Republic

• Main Authors: Lukáš Leksovský, Daniel Stavárek
• Format: Article
• Language: English
• Published: Mendel University Press 2011-01-01
• Series: Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis
• Subjects: efficiency; Data Envelopment Analysis; CCR model; BCC model; constant returns to scale
• Online Access: https://acta.mendelu.cz/59/4/0143/

This paper is the first attempt to analyze efficiency of building societies in the Czech Republic. We apply non-parametric method Data Envelopment Analysis on data from all building societies in the sector over the period 2002–2008. Having deposits received and administrative expenses as inputs and volume of loans disbursed as output we estimate efficiency scores of all individual building societies as well as calculate the average efficiency in the industry. For this purpose we use two alternative models that allows for constant and variable returns of scale respectively. The results suggest that there is no significant improvement in efficiency of building societies during the estimation period. Furthermore, most of the building societies have not been operating at appropriate size. We also found that Českomoravská stavební spořitelna, a. s. was the most efficient building society in the Czech Republic according to the both models applied. In order to increase efficiency, we suggest reduction in the number of external employees and agents or increase of their productivity, more sophisticated products that can outperform the standard services and effective response to changes in the legislature.