Efficiency in the Market Structure of the Banking Sector in Croatia
Efficiency in the Market Structure of the Banking Sector in Croatia

Author(s): Dina Korent, Anamarija Ratković, Marijana Bubanić
Subject(s): Social Sciences
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Market structure; Efficiency; Banking sector
Summary/Abstract: The purpose of this paper was to determine the market structure of the banking sector in Croatia and the characteristics of its technical efficiency for the period from 2009 to 2022 by applying descriptive statistics and data envelopment analysis (DEA). It was determined that the banking sector in Croatia is characterized by a relatively high and persistent technical efficiency of an oligopolistic market structure with a trend of growing consolidation. On average, managers use resources efficiently and are successful in exploiting economies of scale, with scale efficiency surpassing pure technical efficiency. The aforementioned efficiencies generally grow and are achieved more frequently with the increase in the size of banks, i.e., credit institutions The results imply that small banks could increase efficiency by more rational use of inputs, and, assuming growing returns to scale, by exploiting economies of scale through internal growth or further sector consolidation.

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