TITLE:
Measuring the Technical Efficiency for the Shipping Banks—An Approach Using Data Envelopment Analysis
AUTHORS:
Marina Maniati, Evangelos Sambracos
KEYWORDS:
Technical Efficiency, Shipping Banks, DEA, Shipping Finance, Profitability
JOURNAL NAME:
Theoretical Economics Letters,
Vol.7 No.3,
April
18,
2017
ABSTRACT: The
international transportation industry involves various sectors, shipping being
one with particular characteristics which differentiates it from others
especially as relevant capital risk is concerned. Within this scope, shipping
banks are required to assess a number of factors in order to limit the risk
from loans, considering the investment capital required. The efficiency of
shipping banks is particularly important as it may affect the borrowing level and consequently the financial situation and investment
activity in shipping market. This paper examines the
Technical Efficiency (TE) of 71 banks operating world-wide in the maritime
sector from 2005 to 2010, which is the period that the shipping industry
reached its peak and one of its lowest point, making extremely difficult to
secure debt finance in shipping, by using Data Envelopment Analysis (DEA) and presents the factors which may affect their technical efficiency,
through the application of Regression Analysis. Based on the paper results, most banks during the
study period are technically inefficient, whereas TE is proved to be higher
under the assumption of variable returns to scale (VRS DEA model) when comparing
to constant returns (CRS DEA model). Statistically significant variables are
total deposits and total assets for both TE-CRS and TE-VRS and ROE (Return On
Equity) for TE-VRS, providing significant information regarding factors on
which management should further focus, in order to maintain and reinforce
technical efficiency with respect to their strategy for financing shipping
sector.