3 / 2022                

 

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Technical Efficiency of banks in Slovakia from the point of view of mortgage transactions

Eva HORVÁTOVÁ

Introduction

During the period after the financial crisis, the Slovak banking sector maintained its credit growth. In the Slovak Republic, real estate and housing loans represent a large share of total loans and bank assets. The financing of real estates was a dominant element, because the loans were used not only to purchase real estate, but also to finance of development projects. Slovak households have long been among the fastest in debt in the eurozone. The loans to GDP ratio grew from 25% in 2015 to 32,9 % in 2019.

The analysis of the technical efficiency of the Slovak banks mortgage business points out the areas, in which the individual banks are specific. A summary overview of the technical efficiency of the mortgage banks in Slovakia points out their relative advantages and disadvantages. BCC models with variable returns to scale were used for the analysis, because this model consider the size of the banks. Three output-oriented models have been used and they give recommendations to improve the output of banks.  One input-oriented model gives recommendations to improve the use of inputs of the banks.

According to economic theory, efficiency is defined as a state where it is impossible to produce one more unit of a good with the given resources without having to limit the production of another good. It assumes a perfect state, when there is no waste and the company produces at the limit of its production possibilities. 

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