Efficiency, Productivity and Stock Performance: Evidence from the Turkish Banking Sector

This paper investigates the link between stock performance of the listed commercial banks in the Turkish stock exchange and three measures of bank performance, such as technical efficiency, scale efficiency and productivity for the period 1998-2008. The relationship between efficiency and stock returns is investigated by running a regression of stock returns on measures of performance and some bank specific variables. The results indicate that the changes in three measures of performance have positive and significant effect on stock returns, suggesting that stocks of technical efficient, scale efficient and productive banks tend to outperform their inefficient and unproductive rivals.