Productivity efficiency of the systemic banks: Evidence from Greece

Abstract

This study delves into the productivity efficiency of Greek systemic banks for the years 2013 and 2014, that is, the two years following the recapitalization process of the Greek banking system. Greece’s ongoing debt crisis has severely inflicted domestic banks by causing significant losses in their bond portfolio through the PSI scheme. The immediate consequences were loan portfolio restructurings and capital injections from the Hellenic Financial Stability Fund (HFSF) in order to rebuild the banking system. Employing Data Envelope Analysis to test banking efficiency, we calculate the Malmquist productivity indices for the post-recapitalization period. Our results display that all Greek systemic banks enjoy a remarkable productivity increase of 17.3% according to the geometric mean approach and 18% according to the weighted mean approach.