Towards a framework for evaluating bank efficiency

Abstract

Banks play a vital role in a country's economy and the evaluation of their overall performance is crucial. Over the last ten years, the banking sector in Serbia has experienced a period of turbulence, changes in its ownership structure caused by privatization, organizational structure changes inside bank institutions themselves and changes due to legal requirements. With all of these structural fluctuations, it is essential for banks to maintain and improve their efficiency. Although this issue has been frequently elaborated on in numerous papers, no standard method for evaluating efficiency has been yet agreed upon. Therein, in this paper, a new approach based on the statistical Distance Based Analysis approach shall be presented.