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8/11/2019 DelPrete Discussion Venice WFC
1/24
Competition and Efficiencyin the Banking Sector:
The Case of R. Macedonia
Discussion by:Silvia Del Prete
Bank of Italy
World Finance Conference, July 2014
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
8/11/2019 DelPrete Discussion Venice WFC
2/24
Discussion outline
1 Short summary of the paper2 Main points
Research questionData AnalysisEconometric concerns
3 Suggestions
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
8/11/2019 DelPrete Discussion Venice WFC
3/24
Summary of the paper
The main purpose of the paper
The paper investigates the evolution of bank efficiency in theMacedonian banking sector, in the second part of the last decade
The empirical exercise is carried out by Data Envelopment Analysis
(DEA), across groups of banks
The main findings suggest that bank efficiency improved during2006-09 and this result is positively affected by the increasingcompetition due to foreign players (with higher technologies and lower
administrative costs), generating spillovers on the local medium-sizedMacedonian banks
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
8/11/2019 DelPrete Discussion Venice WFC
4/24
Summary of the paper
The main purpose of the paper
The paper investigates the evolution of bank efficiency in theMacedonian banking sector, in the second part of the last decade
The empirical exercise is carried out by Data Envelopment Analysis
(DEA), across groups of banks
The main findings suggest that bank efficiency improved during2006-09 and this result is positively affected by the increasingcompetition due to foreign players (with higher technologies and lower
administrative costs), generating spillovers on the local medium-sizedMacedonian banks
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
S
8/11/2019 DelPrete Discussion Venice WFC
5/24
Summary of the paper
The main purpose of the paper
The paper investigates the evolution of bank efficiency in theMacedonian banking sector, in the second part of the last decade
The empirical exercise is carried out by Data Envelopment Analysis
(DEA), across groups of banks
The main findings suggest that bank efficiency improved during2006-09 and this result is positively affected by the increasingcompetition due to foreign players (with higher technologies and lower
administrative costs), generating spillovers on the local medium-sizedMacedonian banks
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Summary of the paper
8/11/2019 DelPrete Discussion Venice WFC
6/24
Summary of the paper
The main purpose of the paper
The paper investigates the evolution of bank efficiency in theMacedonian banking sector, in the second part of the last decade
The empirical exercise is carried out by Data Envelopment Analysis
(DEA), across groups of banks
The main findings suggest that bank efficiency improved during2006-09 and this result is positively affected by the increasingcompetition due to foreign players (with higher technologies and lower
administrative costs), generating spillovers on the local medium-sizedMacedonian banks
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main points to discuss
8/11/2019 DelPrete Discussion Venice WFC
7/24
Main points to discuss
Research question
Not very clear which is the main point of the paper: many questionsin the introduction, not well focused (follow the rule:one paper onequestion)
A possible misunderstanding on the main purpose of this studyderives from the title, which seems to suggest that the paper analyzesthe impact of competition on bank efficiency
None of this is done: the study just shows results on the evolution of
Macedonian banks efficiency during 2006-09 and suggests possibledeterminants of these changes (... but without a causal analysis)
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main points to discuss
8/11/2019 DelPrete Discussion Venice WFC
8/24
Main points to discuss
Research question
Not very clear which is the main point of the paper: many questionsin the introduction, not well focused (follow the rule:one paper onequestion)
A possible misunderstanding on the main purpose of this studyderives from the title, which seems to suggest that the paper analyzesthe impact of competition on bank efficiency
None of this is done: the study just shows results on the evolution of
Macedonian banks efficiency during 2006-09 and suggests possibledeterminants of these changes (... but without a causal analysis)
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main points to discuss
8/11/2019 DelPrete Discussion Venice WFC
9/24
Main points to discuss
Research question
Not very clear which is the main point of the paper: many questionsin the introduction, not well focused (follow the rule:one paper onequestion)
A possible misunderstanding on the main purpose of this studyderives from the title, which seems to suggest that the paper analyzesthe impact of competition on bank efficiency
None of this is done: the study just shows results on the evolution of
Macedonian banks efficiency during 2006-09 and suggests possibledeterminants of these changes (... but without a causal analysis)
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main points to discuss
8/11/2019 DelPrete Discussion Venice WFC
10/24
Main points to discuss
Research question
Not very clear which is the main point of the paper: many questionsin the introduction, not well focused (follow the rule:one paper onequestion)
A possible misunderstanding on the main purpose of this studyderives from the title, which seems to suggest that the paper analyzesthe impact of competition on bank efficiency
None of this is done: the study just shows results on the evolution of
Macedonian banks efficiency during 2006-09 and suggests possibledeterminants of these changes (... but without a causal analysis)
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main points to discuss
8/11/2019 DelPrete Discussion Venice WFC
11/24
Data Analysis
The sample of 18 banks is very small: it is not clear if you areconsidering all the banks or just a sample
In this second case, it should be clarified how these banks account in
the Macedonian banking system (e.g., in terms of total assets, loans,branches, etc.)
Even if the main exercise to measure bank efficiency is conducted byDEA, more descriptive statistics, using traditional balance sheetindicators (ROA, ROE, cost to income ratio, capital requirements,
bad loans, etc.) is necessary to well present the subsequent analysison DEA
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main points to discuss
8/11/2019 DelPrete Discussion Venice WFC
12/24
Data Analysis
The sample of 18 banks is very small: it is not clear if you areconsidering all the banks or just a sample
In this second case, it should be clarified how these banks account in
the Macedonian banking system (e.g., in terms of total assets, loans,branches, etc.)
Even if the main exercise to measure bank efficiency is conducted byDEA, more descriptive statistics, using traditional balance sheetindicators (ROA, ROE, cost to income ratio, capital requirements,
bad loans, etc.) is necessary to well present the subsequent analysison DEA
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main points to discuss
8/11/2019 DelPrete Discussion Venice WFC
13/24
Data Analysis
The sample of 18 banks is very small: it is not clear if you areconsidering all the banks or just a sample
In this second case, it should be clarified how these banks account in
the Macedonian banking system (e.g., in terms of total assets, loans,branches, etc.)
Even if the main exercise to measure bank efficiency is conducted byDEA, more descriptive statistics, using traditional balance sheetindicators (ROA, ROE, cost to income ratio, capital requirements,
bad loans, etc.) is necessary to well present the subsequent analysison DEA
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main points to discuss
8/11/2019 DelPrete Discussion Venice WFC
14/24
Data Analysis
The sample of 18 banks is very small: it is not clear if you areconsidering all the banks or just a sample
In this second case, it should be clarified how these banks account in
the Macedonian banking system (e.g., in terms of total assets, loans,branches, etc.)
Even if the main exercise to measure bank efficiency is conducted byDEA, more descriptive statistics, using traditional balance sheetindicators (ROA, ROE, cost to income ratio, capital requirements,
bad loans, etc.) is necessary to well present the subsequent analysison DEA
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main points to discuss
8/11/2019 DelPrete Discussion Venice WFC
15/24
Econometric concerns
DEA is a non-parametric measure of efficiency: comparison of eachunit with the frontier (benchmark)
... not clear which are the determinants of the increasing efficiencyduring the period under review ...
In order to well disentangle the causes of the improvement in bankefficiency (with policy implications), why not using panel analysis andperformance equations?
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main points to discuss
8/11/2019 DelPrete Discussion Venice WFC
16/24
Econometric concerns
DEA is a non-parametric measure of efficiency: comparison of eachunit with the frontier (benchmark)
... not clear which are the determinants of the increasing efficiencyduring the period under review ...
In order to well disentangle the causes of the improvement in bankefficiency (with policy implications), why not using panel analysis andperformance equations?
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main points to discuss
8/11/2019 DelPrete Discussion Venice WFC
17/24
Econometric concerns
DEA is a non-parametric measure of efficiency: comparison of eachunit with the frontier (benchmark)
... not clear which are the determinants of the increasing efficiencyduring the period under review ...
In order to well disentangle the causes of the improvement in bankefficiency (with policy implications), why not using panel analysis andperformance equations?
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main points to discuss
8/11/2019 DelPrete Discussion Venice WFC
18/24
Econometric concerns
DEA is a non-parametric measure of efficiency: comparison of eachunit with the frontier (benchmark)
... not clear which are the determinants of the increasing efficiencyduring the period under review ...
In order to well disentangle the causes of the improvement in bankefficiency (with policy implications), why not using panel analysis andperformance equations?
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main suggestions
8/11/2019 DelPrete Discussion Venice WFC
19/24
Main suggestions to improve the paper
Defining the main purpose of the paper, indicating which is itsnovelty to respect to the existing theoretical and empirical literature
Much more detail on data description of the sample of banks:presenting traditional balance sheet indicators before the relative
(peering) analysis with DEAInvestigating the determinants of the increase in bank efficiency withpanel analysis using performance equations, where the dependentvariable is an efficiency index and the independent variables are
bank-level characteristics, regulation and credit market featuresTake more care in drafting the paper: the English is poor and thepaper is difficult to read
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main suggestions
8/11/2019 DelPrete Discussion Venice WFC
20/24
Main suggestions to improve the paper
Defining the main purpose of the paper, indicating which is itsnovelty to respect to the existing theoretical and empirical literature
Much more detail on data description of the sample of banks:presenting traditional balance sheet indicators before the relative
(peering) analysis with DEAInvestigating the determinants of the increase in bank efficiency withpanel analysis using performance equations, where the dependentvariable is an efficiency index and the independent variables are
bank-level characteristics, regulation and credit market featuresTake more care in drafting the paper: the English is poor and thepaper is difficult to read
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main suggestions
8/11/2019 DelPrete Discussion Venice WFC
21/24
Main suggestions to improve the paper
Defining the main purpose of the paper, indicating which is itsnovelty to respect to the existing theoretical and empirical literature
Much more detail on data description of the sample of banks:presenting traditional balance sheet indicators before the relative
(peering) analysis with DEAInvestigating the determinants of the increase in bank efficiency withpanel analysis using performance equations, where the dependentvariable is an efficiency index and the independent variables are
bank-level characteristics, regulation and credit market featuresTake more care in drafting the paper: the English is poor and thepaper is difficult to read
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main suggestions
8/11/2019 DelPrete Discussion Venice WFC
22/24
Main suggestions to improve the paper
Defining the main purpose of the paper, indicating which is itsnovelty to respect to the existing theoretical and empirical literature
Much more detail on data description of the sample of banks:presenting traditional balance sheet indicators before the relative
(peering) analysis with DEAInvestigating the determinants of the increase in bank efficiency withpanel analysis using performance equations, where the dependentvariable is an efficiency index and the independent variables are
bank-level characteristics, regulation and credit market featuresTake more care in drafting the paper: the English is poor and thepaper is difficult to read
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
Main suggestions
8/11/2019 DelPrete Discussion Venice WFC
23/24
Main suggestions to improve the paper
Defining the main purpose of the paper, indicating which is itsnovelty to respect to the existing theoretical and empirical literature
Much more detail on data description of the sample of banks:presenting traditional balance sheet indicators before the relative
(peering) analysis with DEAInvestigating the determinants of the increase in bank efficiency withpanel analysis using performance equations, where the dependentvariable is an efficiency index and the independent variables are
bank-level characteristics, regulation and credit market featuresTake more care in drafting the paper: the English is poor and thepaper is difficult to read
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
8/11/2019 DelPrete Discussion Venice WFC
24/24
THANK YOU FOR YOUR ATTENTION
Silvia Del Prete (Bank of Italy) Competition and Efficiency World Finance Conference, July 2014
