engleski

Does Ownership Structure Affect Bank Performance in The Covid-19 Pandemic Period? Evidence from Croatia

Commercial banks are undoubtedly the most crucial institutions in the financial system and the country’s economic development and this is especially true in developing countries with underdeveloped financial systems. Banks’ crucial intermediary function of transferring the publics' deposits and savings in the business sector once more shows that „banks are the main channel for savings and the allocation of credit” (Sufian & Kamarudin, 2016). Thus, bank efficiency is crucial for economic stability and development. It is therefore intensively researched and the Data Envelopment Analysis (hereafter DEA) is one of the main nonparametric methodologies employed for efficiency evaluation. The measurement of bank efficiency has become an even greater imperative in the COVID-19 pandemic. Even though the Croatian banking sector in 2020 has been highly liquid and capitalized, it is important to conclude on the impact the crisis 2020 year had on the banking sector. Interestingly, the banking sector is dominated by foreign-owned banks that possess a total share in total bank assets of around 90.2% (HNB, 2019). The objective of this paper is to investigate and explore the relationship between bank ownership and performance (i.e. efficiency) before and after the COVID-19 pandemic in a sample of 20 Croatian commercial banks in the period from 2015 to 2020. The interconnection between these variables is examined with the use of a dynamic data envelopment analysis (DEA) framework. In other words, the relative efficiency of Croatian banks is measured in order to determine whether the ownership structure impacts the bank efficiency in the crisis period. The main hypothesis revolves around the notion that foreign banks are in general more efficient than domestic banks. This is a subject that is very contemporary and needs to be looked into. However, to the best of the authors’ knowledge, there is not a study covering this subject regarding the Croatian banking sector. Therefore, the findings of this paper would contribute to the literature regarding different applications of DEA in banking and would bring new insights to practitioners, bank management and bank stakeholders altogether.

commercial banks ; bank ownership ; relative efficiency

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