Efficiency and productivity in Turkish banking sector

We study the efficiency and productivity growth in Turkish banking by using the non-parametric method, data envelopment analysis (DEA) and the Malmquist index in the period of 2003-2012. One aim of the study is to examine whether the banking reforms undertaken after the crisis in 2001 have had any effect on productivity. This is also a period of rapid development in the banking sector as it is evident from the substantial increases in numbers of branches, employees, and ATMs, which should affect productivity. We find that productivity growth in Turkish commercial banking sector is 0.1 percent per year over the period, which is rather low. We also present some evidence that privately-owned banks have done slightly better than foreign banks. We also look into the effect of the Global financial Crisis in 2008, and conclude that contrary to the popular impression banking sector might have suffered from it.