IMPACT OF FINANCIAL CRISIS ON BANKING EFFICIENCY: EVIDENCE FROM ROMANIA

In this paper, we use a non-parametric approach to examine the efficiency of banks from Romania in the face of global financial crisis, during a ten year period, from 2002 to 2012. We limit our sample to this period in order to observe the dynamics of efficiency before and after the financial crisis. We develop a empirical model that involves estimating bank efficiency. In order to measure the efficiency growth of the banking industry, we calculate Malmquist index using a non-parametric linear programming approach. Our results suggest that during the first period under study (2002-2007), the banks from Romania have been more efficient, mainly because of reforms for the integration in to European Union. In the second period (2007-2012), financial crisis took its toll on banking efficiency even though banks have attempted to reduce personnel costs.