测算自由化改革之前和之后的银行业效率：土耳其银行体系所提供的证据

W/PSZ976 POLICY RESEARCH WORKING PAPER 2476 M easuring Banking Banking efficiency in Turkey was expected to improve Efficiency in the Pre- after liberalization. Instead, it and Post-Liberalization declined, perhaps because of increasing macroeconomic Environment instability. Evidence from the Turkish Banking System Cevdet A. Denizer Mustafa Din, Murat Tarimcilar The World Bank Europe and Central Asia Region Poverty Reduction and Economic Management Sector Unit and Development Data Group November 2000  POLICY RESEARCH WORKING PAPER 2476 Summary findings Denizer, Dinc, and Tarimcilar examine banking banks. Banks that were privately owned or foreign efficiency before and after liberalization, drawing on owned had been expected to respond better to Turkey's experience. They also investigate the scale liberalization, because they were smaller and more effect on efficiency by type of ownership. dynamically structured, but they were no more efficient Their findings suggest that liberalization programs than state-owned banks. were followed by an observable decline in efficiency, not One reason for the systemwide decline in efficiency an improvement. During the study period Turkish banks might have been the general increase in macroeconomic did not operate at the optimum scale. instability during the period studied. Another unexpected result was that efficiency was no different between state-owned and privately owned This paper-a joint product of the Poverty Reduction and Economic Management Sector Unit, Europe and Central Asia Region, and the Development Data Group-is part of a larger effort in the Bank to understand banking efficiency after financial liberalization in Europe and Central Asia. Copies of the paper are available free from the World Bank, 1818 H StreetNW,Washington, DC 20433. Please contactMustafaDinc, roomMC2-814, telephone 202-473-6233, fax 202-522- 3669, email address mdinc@worldbank.org. Policy Research Working Papers are also posted on the Web at www.worldbank.org/research/workingpapers. The other authors may be contacted at cdenizer@worldbank.org or muratt@gwu.edu. November 2000. (58 pages) The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Produced by the Policy Research Dissemination Center  Measuring Banking Efficiency in the Pre- and Post-Liberalization Environment: Evidence from the Turkish Banking System * Cevdet A. Denizer and Mustafa Dinc World Bank Murat Tarimcilar George Washington University JEL Classification: C14, C61, G21, G28, Keywords: Banking; Efficiency; Liberalization; Data Envelopment Analysis; * An earlier version of this paper was presented at the INFORMS Spring Meeting in Salt Lake City, Utah May 7-10, 2000. The findings, interpretations, and conclusions are entirely those of authors, and do not necessarily represent the views of the World Bank, its executive directors, or the countries they represent. Corresponding author: M. Dinc, The World Bank, Room MC2-814, 1818 H Street NW Washington DC, 20433 Tel: (202) 473 6233, Fax: (202) 522 3669, e-mail: Mdinc@worldbank.or2   INTRODUCTION Over the last two decades the globalization of financial markets has gained additional momentum as a result of liberalization programs undertaken by various countries. This, in turn, enhanced the economic links between these markets and hence deepened the integration of financial institutions (Ragunathan, 1999). As a result, these financial institutions face today a fast-paced, dynamic, and competitive environment at a global scale. Within such a competitive environment, financial institutions are forced to examine their performance because their survival in the dynamic economies of 2l't century will be dependent upon their productive efficiencies. Some earlier studies (Berger and Humphrey, 1991; Berger, Hancock and Humphrey, 1993; and Berger, Hunter and Timme, 1993) showed that, particularly in banking sector, inefficiencies are more important than scale and scope issues. Hence, in response, firms have been trying to adapt and to adjust themselves to improve their productive efficiencies in this changing social and economic environment (Harker and Zenios, 2000). For the past 20 years these circumstances prompted many countries to liberalize their financial sector through deregulation in order to improve efficiency performance. Bhattacharyya, Bhattacharyya and Kumbhakar (1997) report that deregulation and liberalization had a major impact on productivity and efficiency increases in various industries and the banking sector in some Eastern and Central European countries, as well as China. Although the primary goal of liberalization and deregulation has been to improve efficiency, earlier results have been mixed, -in particular, the short-term effects of liberalization have been discouraging (Leightner and Lovell, 1998; Harker and Zenios, 2  2000). For example, Berg, Forsund and Johnson (1991) found that in Norway during 1980-89 the productivity of banks declined initially but eventually rose. Zaim (1995) reported efficiency gains in Turkish banks after the 1980 liberalization program. Leightner and Lovell (1998) investigated the Thai banking industry from both the bank and the government's perspective from 1989 to 1994. They found that the average Thai bank had a rapid productivity gain based on its own objectives, but that during this period productivity gains from the liberalization program could not help advancing the government objectives (overall economic growth). Korea launched a major financial liberalization program in the 1980s. Gilbert and Wilson (1998) examined Korean banking institutions between 1980 and 1994 and found that most Korean banks experienced efficiency gains during this period as government controls were lifted. On the other hand, it was found that in the U.S. (Humprey and Pulley, 1997) and in Spain' (Grifell-Tatje and Lovell, 1996) deregulation resulted in a decline in efficiency. It will be prudent to keep in mind that the consequences of deregulation may differ across countries and may also depend on the sectoral conditions prior to deregulation. Furthermore, it should be noted that all of the aforementioned studies investigated the efficiency after or during the deregulation period without covering the period before liberalization/deregulation programs. This may have altered the real impact of such programs. Extending the evaluation to before and after liberalization could show the real impact of liberalization programs on efficiency, but this has not yet been demonstrated (Harker and Zenios, 2000). There have been a number of studies on liberalization programs and their impact on efficiency in industrialized countries and ' Later, Grifell-Tatje and Lovell, (1997) employed a different specification and reached to the opposite conclusion. 3  transition economies. However, a limited number of studies have been undertaken in the context of mixed developing economies where deregulation and liberalization programs have been introduced (Bhattacharyya et al, 1997). Turkey has undergone a number of major policy changes in bank regulation over the last 20 years (Zaim, 1995; Zaim and Taskin, 1997; Denizer, 1997). The country's banking sector has been a target of heavy regulatory interventions2 for a long time. However, since the 1980s there has been a persistent move to liberalize banking markets in order to increase competition and hence to improve the efficiency of the financial systems. The liberalization program either abolished or relaxed regulations, and the sector responded quickly to these developments. Increased competitPon forced the banks to reduce their costs, which resulted in the closure of unprofitable branches and the reduction of staff. This eventually increased the profitability of the banking system (Mahmud and Zaim 1997). Even after such improvements, the question of whether financial reforms improved efficiency remains to be answered. Some earlier studies (Zaim, 1995; Ertugrul and Zaim, 1996) examined the impact of financial liberalization on the efficiency of Turkish banking and found that liberalization had a positive effect on efficiency. These studies, however, were focused on certain functions of banking and were limited to few years after the liberalization program. Hence, a comparison of before 2 Gual (1999) groups these regulatory interventions into three major categories. The first one is regulations that soften domestic competition. This category includes controls on credit, interest rates and fees, restrictions on entry and mergers and acquisitions, and controls on capital flows. The second group is regulations that limit the scope and scale of banks. This category involves restrictions on domestic branching and establishment in foreign markets, and limits to activities within conventional banking, insurance, and securities. The last group is mainly concerned with regulations that alter the external competitive position of banks. This final category deals with reserve and investment coefficients, solvency and capital adequacy regulations, deposit insurance schemes, and restrictions on ownership linkages with non-financial firms. 4  and after liberalization was not possible. Mercan and Yolalan (2000) provide an excellent survey of other studies of the efficiency of Turkish banks. In this paper, we use a non-parametric mathematical programming model, DEA, for each year from 1970 to 1994 to determine whether or not the liberalization program improved the efficiency of the Turkish banks by function and by ownership. It is hypothesized that after liberalization with the increasing new entries and relaxed regulation competition will intensify, which in turn will discipline banks in resource management and force them to be more efficient. We also examine the sources of inefficiency by function and by ownership. This study significantly differs from earlier works in two respects. First, the application of a two-stage DEA methodology to the banking sector facilitates investigation of both production and intermediation functions of the banks to determine the relationship of these two components of bank operations. It allows us to examine the banks' efficiency in separate dimensions without one biasing the other. Although these components are two discrete analyses, they complete a continuum in presenting a more comprehensive picture of the system. Secondly, the temporal focus of the study is 1970 to 1994. Using an unprecedented twenty-five year time series of data improves the chances of identifying the long-term policy implications and comparing efficiency before and after liberalization. The organization of the paper is as follows: The next section gives a short history of recent policy and regulation changes in the Turkish banking sector. Section 3 discusses methodology and its strengths. A two-stage modeling framework is presented, which considers both roles in this section. The selected variables and reasoning behind the 5  selection with the modeling framework are also discussed. Section 4 presents the findings and discussion. The paper concludes with suggestions for future research. TURKISH BANKING SECTOR REFORMS Until the 1 980s, economic policies in Turkey were inward looking, with extensive protection against foreign competition. During this period the share of state in banking, for example, reached to more than 50 percent (Zaim and Taskin, 1997; Denizer, 1997). Because of entry restrictions prior to 1980, Turkish commercial banks enjoyed an oligopolistic environment and faced almost no competition. As a result these banks were highly profitable. Such profitability may have given overconfidence to commercial banks, which in turn might have prevented a careful analysis of bank performance and managerial ability of their executives. This lack of awareness would have caught these institutions off-guard after the liberalization program (Oral and Yolalan, 1990). As a part of a structural adjustment program to switch to an outward-oriented growth strategy, the Turkish economy in general and financial system in particular have been significantly opened up and liberalized over the last two decades. The banking- related component of these reforms had two key elements: the elimination of controls on interest rates and a significant reduction in directed credit programs, as well as the relaxation of entry barriers into the banking system in order to promote competition and increase efficiency. There were also measures to develop equity and bond markets. In 1984 Turkish residents were allowed to open foreign currency accounts in banks, thereby increasing product variety and services. This process culminated in the opening up of the 6  capital account in 1989, further facilitating international trade in goods and financial services. These were important changes considering the earlier constraints on financial markets. Interest rates had been controlled since the 1940s -a policy in keeping with the state-led development strategy based on import substitution. Rates had been changed only five or six times until 1978. The interest rate control policies led banks already in the system to non-price competition through the opening of new branches. Directed credit programs absorbed almost 75 percent of loanable funds. Entry, especially after the early 1960s, was highly restrictive. This situation, coupled with the exit of a large number of banks during the 1960-80 period, resulted in a concentrated market dominated by large private and public banks with extensive branch networks. Among the 42 existing banks in 1980, only four were foreign. Accordingly, the bank-dominated financial sector was uncompetitive and inefficient prior to 1980 with a limited range of products (Denizer, 1997). Moreover, the government strictly controlled the capital account. There were marked changes in the financial sector following the liberalization of financial prices and policies in the 1980s. The Istanbul Stock Exchange was reopened and, over time, became an integral part of the financial system. Government securities began to be auctioned in 1985 and quickly became an important portion of the stock of financial assets. The inter-bank market began to operate in 1986, allowing banks to lend and borrow from each other for overnight facilities. While these liberalization activities were taking place, Turkey did not privatize the large public banks. These banks still play a significant role in the banking sector, accounting for about 40 percent of total banking assets. 7  What has been remarkable about financial liberalization in Turkey has been the entry of new banks, both domestic and foreign. By 1990 there were 23 foreign banks in the system, meaning 19 new entries, which matches the number of new entries by the Turkish banks. With interest rate deregulation, which allowed banks to engage in price competition, the entry of new banks led to a significant decline in the traditional measures of concentration ratios, suggesting that competition in the sector has improved. These visible changes indicate that there have been major movements towards the free operation of financial markets. Indeed, by 1998 the Turkish banking sector had minimal policy constraints on domestic and financial market intermediation (Denizer, Gultekin, and Gultekin, 2000). Although this is the outcome targeted by the reforms, whether the reforms achieved their key objective, namnely, increasing the efficiency of the financial sector, is more difficult to assess. A casual look at the present banking sector suggests efficiency improvements have been less than expected, as operating ratios remained relatively high. As noted earlier, the few existing studies do not fully take into account the various dimensions of efficiency measures. This study aims to fill that gap in the literature. METHODOLOGY The two approaches used to assess productive efficiency of an entity, parametric (or econometric) and non-parametric (mathematical programming), employ different techniques to envelop a data set with different assumptions for random noise and for the structure of the production technology. These assumptions, in fact, generate the strengths 8  and weaknesses of both approaches. The essential differences and the sources of (dis)advantages of these approaches can be grouped under two categories: (a). The econometric approach is stochastic and attempts to distinguish the effects of noise from the effects of inefficiency; it is based on sampling theory for the interpretation of essentially statistical results. The programming approach is non-stochastic, and hence groups noise and inefficiency together and calls this combination "inefficiency." It is built on the findings and observation of population and assesses efficiency relative to other observed units. (b). The econometric approach is parametric and confounds the effects of misspecification of functional form with inefficiency. The programming model is non-parametric and population-based and hence less prone to this type of specification error (Lovell 1993). This inquiry employs the non-parametric frontier approach3 to estimate the relative efficiency of commercial banks in Turkey. This approach, also known as Data Envelopment Analysis (DEA), is a mathematical programming technique that measures the efficiency of a decision-making unit (DMU) relative to other similar DMUs with the simple restriction that all DMUs lie on or below the efficiency frontier (Seiford and Thrall, 1990). It was first introduced by Charnes, Cooper and Rhodes in 1978. Since then its utilization and development have grown rapidly including many banking-related applications. For a detailed review of these extensions and developments in DEA, see Charnes, Cooper, Lewin and Seiford, (1994) and Seiford, (1994, 1996). This analysis is concerned with understanding how each DMU is performing relative to others, the causes of inefficiency, and how a DMU can improve its 3 Bauer, Berger, Ferrier and Humphrey (1998) provide a detailed comparison of methods used in measuring the efficiency of financial institutions. 9  performance to become efficient. In that sense, the focus of the methodology should be on each individual DMU rather than on the averages of the whole body of DMUs. DEA calculates the relative efficiency of each DMU in relation to all the other DMUs by using the actual observed values for the inputs and outputs of each DMU. It also identifies, for inefficient DMUs, the sources and level of inefficiency for each of the inputs and outputs (Chames, Cooper, Lewin and Seiford, 1994). Basic DEA Models DEA begins with a relatively simple fractional programming formulation. Assume that there are n DMUs to be evaluated. Each consumes different amounts of i inputs and produces r different outputs, i.e. DMUj consumes xJi amounts of input to produce yjr amounts of output. It is assumed that these inputs, xji, and outputs, yjr, are non-negative, and each DMU has at least one positive input and output value. The productivity of a DMU can be written as: s E U Yrj h = = (1) Evi xi i=l In this formulation, u and v are the weights assigned to each input and output. By using mathematical programming techniques, DEA optimally assigns the weights subject to the following constraints: The weights for each DMU are assigned subject to the constraint that no other DMU has an efficiency greater than 1 if it uses the same weights, implying that efficient DMUs will have a ratio value of 1. The derived weights, u and v are not negative. 10  The objective function of DMUk is the ratio of the total weighted output divided by the total weighted input: Maximize hk= r=l (2) s E UrYrj subjectto r=