Abstract:

Purpose- The purpose of the present paper is to assess the efficiency of the CEE countries banks.
Design/methodology/approach – In order to achieve the results of the present research, the qualitative overview of the scientific literature on Data Envelopment Analysis (DEA) has been performed. To gain the required data, the authors of the present paper have analyzed the work of the CEE countries banks in the reporting period of 2006 – 2011. The financial indicators applied for the needs of the present research have been obtained from the data available on the web page of the Association of Latvian Commercial Banks, Eurostat, European Central Bank, as well as from the annual reports of the banks.

To assess the efficiency of the banks, a variety of DEA models exist, however, for the needs of the present research, the authors have employed the most frequently used models – CCR DEA and BCC DEA.

Findings – Based on the two DEA models, the findings showed that the most effective operating Lithuania and Slovenia's banking system, while the most inefficient are the other CEE countries banks.

Research limitations/implications – The research performed has provided information on the efficiency rate of the banks operating in CEE countries, which allows making decisions considering future perspectives of each bank not only from the standpoint of a shareholder, but also from the standpoint of a client and bank personnel.  

Originality/value – Taking into consideration how important the efficiently developed banking system is, especially in the states with a high competitive dynamics (including Latvia), the banks should change the present strategy to constantly improve their efficiency rate.