Investigating cost efficiency in the branch network of a Greek bank: an empirical study

Abstract

PurposeThe purpose of this study is to examine the cost efficiency of 58 branches of a major Greek commercial bank, in six major Greek cities, for the years 2000 and 2001.Design/methodology/approachThe efficiency is measured through the data envelopment analysis (DEA) method. Using regression analysis, the effect of size on cost efficiency is also examined.FindingsThe results indicate that there is a room for substantial efficiency improvements. The average inefficiency is about 30 per cent. It has also been observed that rural branches tend, on average, to be more efficient than urban branches.Research limitations/implicationsA direction of future research would be to extend the analysis of determinants of bank branch efficiency in order to investigate the role that the region and the characteristics of the branch play in relation to efficiency.Originality/valueThe paper provides a comparative evaluation of the efficiency of 58 branches of a major Greek commercial bank using the DEA method.