A comparison of total factor productivity among deposit banks operating in Turkey

This study aims to analyze the efficiency levels of the banking sector in Turkey by comparing the total factor productivity (TFP) of deposit banks. The banking sector plays a crucial role in economic development through its financial intermediation function. In this context, measuring productivity changes in the sector is important both for evaluating bank performance and for guiding sectoral development. In this study, efficiency and productivity analyses of 28 deposit banks, which are significant for the Turkish economy and banking sector, were conducted using the Färe-Primont, Hicks-Moorsteen, and Malmquist-TFP indices. Input-oriented technical efficiency (ITE), mixed efficiency (IME), and residual input-scale efficiency (RISE) were used to calculate the efficiency of total factor productivity (TFPE), while output-oriented technical efficiency (OTE), mixed output efficiency (OME), and residual output-scale efficiency (ROSE) were used for TFP calculations. The efficiency of these 28 deposit banks between 2018 and 2023 was measured, and the trends over the years were examined. Five input and four output variables were used: inputs included the number of branches, loans granted, number of employees, interest expenses, and personnel expenses; outputs included interest income, net profit/loss for the period, total assets, and total deposits. The analyses were conducted using the DPIN 3.0 software. The results indicate differences in efficiency among banks, with some years showing productivity gains due to technological improvements, while other periods experienced efficiency losses. The findings suggest that in order to sustainably improve their performance, deposit banks should focus on efficient resource use, technology adoption, adaptation, and optimization of economies of scale.