Authors: Georgia Giordani; Christos Floros
Addresses: Department of Economics, Portsmouth Business School, University of Portsmouth, Richmond Building, Portsmouth, PO1 3DE, UK ' Department of Accounting and Finance, Technological Educational Institute of Crete, Estavromenos, Heraklion, Crete, 71004, Greece; School of Social Sciences, Hellenic Open University, Patras, GR26335, Greece
Abstract: This paper investigates the effect of automated teller machines (ATMs), information technology (IT) investments and other determinants on the efficiency and profitability of Greek commercial banks. Following the two-step procedure: 1) efficiency is derived via the non-parametric data envelopment analysis (DEA) technique under the variable returns to scale (VRS) assumption; 2) efficiency scores are linked to a series of determinants of bank efficiency using a Tobit regression model. We find that profitability (ROAA and ROAE), ATMs and capitalisation show a negative impact on the efficiency of Greek banks. We also report that banks' size, capitalisation, IT investments and ATMs do not have any effect on the ROAA or the ROAE but they have a positive effect on the fees and commissions. However, we find that ATMs have a negative effect on the net interest income.
Keywords: banking industry; automated teller machines; ATMs; bank efficiency; bank profitability; IT investment; information technology; Greece; non-parametric DEA; data envelopment analysis; capitalisation; ROAA; ROAE; fees; commissions; net interest income.
Global Business and Economics Review, 2015 Vol.17 No.2, pp.217 - 235
Received: 25 Sep 2013
Accepted: 19 Jan 2014
Published online: 17 Mar 2015 *