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Measuring Social Responsible Banks’ Efficiency and Productivity – a Nonparametric Approach
Keywords
sustainable bank, social and environmental responsibility, Data Envelopment Analysis, efficiency frontier, Malmquist index
Abstract
The paper investigates a sample of commercial banks that voluntarily and publicly committed to becoming promoters of sustainability in the financial industry, by applying in their regular banking activity a set of principles related to environmental and societal responsibility. To assess the individual financial profile of these banks and the similarities in terms of business behavior it has been performed several steps. First, it has been computed the descriptive statistics of key financial indicators, namely the market share, the liquidity position, the financial structure, the operational efficiency, profitability, capital adequacy and the individual contribution of each bank to the domestic financial depth. Secondly, to proxy the performance in achieving their objectives, it has been employed the Data Envelopment Analysis nonparametric technique to estimate the relative efficiency scores. Two models’ configurations have been tested, in the assumption of a financial intermediation approach and respectively profit efficiency approach. Then, to gain a comprehensive and dynamic picture, it has been computed the Malmquist productivity index in order to illustrate not only socially responsible banks’ productivity’s changes over time but also the main sources of changes, in terms of catch-up effect and technological progress.