This paper investigates if banking crises can improve efficiency of banking sector, through testing on Turkish experience before and after the crisis period.
The idea comes from business cycles theory, where a crisis is the turning point from which the economy is recovering. In that spirit, if inefficiency plays a role in the occurrence of banking problems, the post-crisis period should be the time of recovering, as bad banks should have been taken over the market. Consequently, we also expect that efficiency or the banking system’s performance should increase during the period following the crisis.
This study is based on ratio and DEA analysis both for bank-level panel data to test the effects of 1994, 2000-2001 crisis experienced in Turkey. Read more..