Assessing performance of Russian and European banks

Abstract

The research goal is to assess performance of “Sberbank Rossii, OJSC compared to its European counterparts and provide results interpretation and summary for “Sberbank Rossii”, OJSC. To achieve this goal, the following tasks were fulfilled: to select appropriate methodology for current study, to define the way it will be used (version of the model, necessary data, framework etc.), to apply this model to selected data sample and to draw conclusions about bank performance and provide summary of results of “Sberbank Rossii”, OJSC. In order to conduct current research DEA methodology has been selected as it is coherent with the goal of the study and has a wide academic and application support in performance assessment of banks. DEA is applied here with adoption of financial intermediation perspective with three data sets of input and output variables, based on input-oriented DEA models with constant and variable return to scale assumptions. The results of the study suggest quite a high level of performance of banks that were chosen for the sample, with efficiency scores different for different data sets. The findings also suggest that performance measurement in banking is sensitive to assumptions about return to scale and type of inputs chosen for DEA (Income Statement or Balance Sheet items). In general, these scores are also subject to influence of external factors. Similarity in scores trends and trends of inputs and outputs between the Russian bank and its European counterparts was also find in the research.