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THE RESTRUCTURING OF THE SPANISH BANKING SYSTEM: ANALYSIS

OF THE EFFICIENCY OF FINANCIAL ENTITIES

ABSTRACT
Purpose – This paper analyses the performance of Spanish banking entities between
2009 and 2013, a period marked by the reform of the banking system with a large
number of mergers and integrations.

Design/methodology/approach – Firstly, efficiency is measured applying the Data


Envelopment Analysis methodology and, then, the Malmquist index is calculated to
assess its evolution.

Findings – The results show that most of the entities have improved their performance
from the production approach. However, from the intermediation approach, the
efficiency of the sample has deteriorated, which raises questions about the sustainability
of the traditional banking business when the current credit restriction strategy is long
lasting.

Practical implications – The comparative analysis demonstrates that, after the deep
reforms carried out in Spain, the banking entities maintain similar efficiency rankings to
those they had at the beginning of the period analysed. This shows that the reform has
created new groups that operate adequately, avoiding the closing of institutions. Despite
the better rationalisation of the available resources, the outlook for Spanish banks
remains unclear in the current macroeconomic context, which does not favour the
banking business.

Originality/value – The study contributes to the literature on Spanish banking system


because it adds new empirical evidence about its restructuring and it applies a DEA
model to a sample before and after mergers. The authors discuss theoretical and
managerial implications and offers suggestions for future research on this field.

Keywords: Banking entities, Mergers, DEA, Malmquist Index, Financial crisis

Acknowledgements: This study was supported by the Spanish National R + D Plan


under the Research Project ECO2015-66240-P and the Regional Government of Aragón
and the European Social Fund under the Research Project S05.
1. Introduction

The Spanish financial system underwent an uncontrolled growth during the first decade

st
of the 21 century. During this period, financial entities (especially savings banks)

expanded throughout the country, opening new branches even in zones outside their

core area and the volume of bank loans rose to unsustainable figures. Most of this

money was obtained from overseas wholesale markets to fund the real estate sector.

With the global economic crisis, and the burst of the Spanish housing bubble, the

savings banks became indebted and had a high percentage of credits on their balance

sheet, which generated a greater risk of insolvency. The unnecessary excess of

productive capacity, based on the growth of promoters and builders loans, with high

default risks, was not well-assessed at the time. Excessive borrowing in wholesale

markets, which caused a significant weakening of the core capital of savings banks, and

the high default ratio in Spain, led to their balance sheets being flooded with property

assets that lost their value daily.

In this paper, we study this transformation process of the Spanish banking sector from

the point of view of the efficiency of the entities. Our objectives are, first, to evaluate

whether the reforms implemented have led to a better performance of the system and,

second, to identify the entities that have shown a better behaviour in this process. To do

so, we carry out a comparison of the efficiency of Spanish banking entities in 2009 and

2013, applying the Data Envelopment Analysis (DEA) and the Malmquist index to

analyse efficiency changes. Unlike prior studies dealing with bank efficiency, we have

measured the performance of financial entities using two different approaches to

efficiency, the production and the intermediation approach. Thus, the results are

expected to provide a more comprehensive view of the effects of the restructuring of the

Spanish banking sector on the entities’ performance. The analysis sheds light on the
effectiveness of the strategy adopted by the Spanish regulator that may be relevant to

assist other countries whose banking systems are facing similar situations.

The paper is organised as follows. In the next section, we develop the context of the

study. The third section describes the effect of banking mergers on efficiency. The

fourth section explains the research methodology and data used in the analysis. The fifth

section presents the empirical results. The discussion is contained in the sixth section

and, finally, the seventh section draws the conclusions.

2. Context

At the end of the decade, so many savings banks were threatened by insolvency that the

financial sustainability of the whole system was at risk. In response to this situation, the

banking sector embarked upon a recapitalization and restructuring process to regain

trust in the system. Among the measures adopted, the following can be highlighted:

- Creation of the Fund of Orderly Bank Restructuring (FROB) to channel public

financial support to financial entities (Royal Decree-law 9/2009).

- Reform of the legal regime of savings banks (Royal Decree-law 11/2010) to enhance

their capitalization and the professionalization of their governing bodies. Later, the Law

26/2013 on savings banks and banking foundations established that savings banks had

to transfer their financial activity to a credit institution and enter into a banking

foundation transformation agreement if they had a value of more than 10,000 million

euros in total consolidated assets or a market share of more than 35% in deposits in their

1
Autonomous communities .

- Increase of core capital requirements through Basel III, aimed at strengthening the

solvency of financial entities by increasing bank liquidity and decreasing bank leverage.

1
Autonomous communities is the official Spanish name for regions.
As a result, the Spanish financial sector has undergone a conversion process of its

commercial banking in which the number of institutions decreased from 54 in 2009 to

17 in 2013 (See Appendix 1). In this process, Spanish savings banks have proven to be

the weakest part of the national financial system (Parejo et al., 2011). The vast majority

of the 45 savings banks that existed in 2009 have been nationalized or acquired by

commercial banks (losing importance in the long term, as in other European countries):

only 2 small savings banks and 4 groups remain. Autonomous communities have lost

their influence over the savings banks, which the Spanish central government now

controls.

Another important factor, in addition to the restructuring of the banking system is the

legal form of Spanish savings banks. They were private foundations and could not issue

capital. However, entities resulting from the integration process can increase their

equity by issuing capital in financial markets. This leads to the improvement of the core

capital that, in a banking entity, is made up of nominal capital and reserves and defines

its solvency level. A higher core capital indicates that an entity has a higher equity

compared to risk-weighted assets. These assets include deposits from central banks (no

risk) and industrial interests with a high risk. Savings banks investments in real estate

were not risk controlled and supervised. With consolidation, it is expected that entities

control their risk exposure by investing less aggressively in non-hedgeable risks. Banks

should hedge any risk at fair-market values and hold capital for absorbing risks which

cannot be hedged (Froot and Stein, 1998).

3. Banking mergers and efficiency

The scope and framework of this study can be explained by the changes that have taken

place in the Spanish banking sector in recent years. In this section, we analyse the
factors that contribute to explaining the effect of mergers on the efficiency of Spanish

banking entities.

According to traditional economic theory, mergers and acquisitions (M&A) create

synergies and lowers costs through economies of scale (Williamson, 1968). M&A

among banking entities are very frequent around the world and, currently, the banking

sector is using them as a strategy for achieving larger size and being more competitive

(Vander Vennet, 2002; Khan, 2011; Alhasan and Asare, 2016). Consolidation will be

sustainable in the long run only if it increases efficiency or does not reduce efficiency

substantially (Berger et al., 2001). However, more care should be taken in terms of the

creation of excessive market power from M&A. According to Berger and Humphrey

(1994), increased market concentration in the United States may lead to slightly less

favourable prices of some deposit and loan accounts for consumers as well as a decrease

in banking efficiency because bank managers enjoy some of the benefits of market

power, such as reduced effort levels. These authors assert that this is not likely to occur

in Europe, as these mergers tend to intensify market competition, resulting in more

favourable prices for consumers and greater efficiency. In any case, country-specific

factors, such as different banking regulations and the different managerial strategies

implemented by banking entities to face the new challenges, are important determinants

in explaining differences in bank efficiency levels (Casu and Molyneux, 2003).

In the last five years, a wave of consolidation has transformed the Spanish banking

industry. The financial crisis has intensified this process and acquisitions have been

considered a means to prevent bank failures. The ability to correctly calculate the risk of

each institution is crucial for good banking supervision and the stability of the financial

system (García-Céspedes and Moreno, 2014). A bigger entity is considered more

competitive and less risky than a smaller one. When an entity is less risky, it obtains
funding in the interbank credit market with better economic conditions. Since the main

activity of a bank is based on capturing customer money to lend to other customers, the

entity that gets more and cheaper funding in the interbank market will be able to pay a

lower interest rate, which will generate a higher margin. Net interest income is the most

important item in the income statement of the entity (supplemented by utility

commissions and other concepts) and has a direct relationship to efficiency. In line with

this, Maudos et al. (2002b) find higher levels of inefficiency in revenues than in costs

and analyse the importance of size to explain the inefficiencies in the revenue side of

banking. It is important to take into account that the resulting entity will be less risky if

it designs a restructuring strategy that includes the reduction of operating expenses such

as salaries, central services expenses, number of branches, technology expenses and

buildings. Currently, banks are decreasing staff costs and making labour force

adjustments to obtain a higher operational efficiency, which generates stress and

insecurity for employees of banking entities (Konstantopoulos et al., 2009). Other

expenses that have been reduced are the rents of branches, custodial fees, security costs,

communications costs, etc.

The growth of Spanish banking entities was achieved by opening branches, which

generated high overheads. In the crisis period, branches became non-profitable and have

burdened the income statement, the opposite of what was intended. As consequence, it

was necessary to close offices and to reduce personnel and other costs. If the entity is

large, for instance, merged entities, increasing the number of offices does not lead to

improved profitability unless it expands into new geographical areas. In a recession,

improved performance is usually achieved by reducing the number of offices. If the

entity is oversized, it should reduce its costs, trying to maintain the business achieved in

the expansionary phase. If banking entities are able to keep their number of clients
despite closing branches, gains emerge from savings in staff and rental costs. However,

cost reduction does not necessarily imply an improvement in efficiency (Tortosa-

Ausina, 2002; Carbo et al., 2003) as the evolution of income also influences this

magnitude.

Although the integration process is taking place to obtain long-term synergies and

increases performance (Bernad et al., 2013), results about the benefits derived from

mergers are not consistent (Gutiérrez Fernández et al., 2013).

4. Methodology and data

We have used the Data Envelopment Analysis (DEA) to analyse the factors that

determine the performance of banking entities. Our database is made up of observations

2
of 17 entities in 2009 and 2013 . The DEA technique is a non-parametric method based

on linear programming that was developed by Charnes et al. (1978) and Banker et al.

(1989). It is used to measure the relative efficiency of various decision-making units

(DMU), which are organizations where several inputs and outputs are taken into

account. It compares the inputs and the outputs of DMUs by establishing a frontier of

efficiency and by evaluating efficiency relative to that frontier. Therefore, a DMU is

qualified as efficient if no other DMU can produce more outputs by using an equal or

smaller quantity of inputs, or if no other DMU can use fewer inputs to produce an

equivalent or higher quantity of outputs. DEA coefficients give an idea of the theoretical

maximum quantity of inputs that could be reduced without affecting the output level

(for instance, a coefficient X means that it would be possible to obtain the same output

with a saving of (100 – X) % of inputs). When the coefficient is 1.00 the DMU is

comparatively efficient, i.e. the DMU optimizes its resources to obtain the output.

2
For 2009, the study considers the sum of the amounts of the input/output variables of the entities that
form the banking groups of 2013.
There are two main alternatives for measuring banking activity, namely, the production

approach and the intermediation approach. The first considers banking institutions as

producers of services for their customers. The intermediation approach expands the

definition of inputs to include deposits and suggests measures of banking output

according to the time value of money, basically in earning assets. It considers banking

institutions primarily as intermediating entities between savers and investors. Prior

studies have measured performance by focusing on one of these two alternatives,

particularly the intermediation approach (Illueca et al., 2009), but there is, as far as we

know, no research that considers both approaches. In this study, we adopt this dual

perspective.

For the production approach, the number of branches and the staff have been included

as inputs in the model. As outputs, we include the amount of deposits, loans and

negotiable securities. Authors such as Ferrier and Lovell (1990), Grifell-Tatje and

Lovell (1996), Fried et al. (2003), Prior (2003), Kumbhakar et al. (2011) and Camanho

and Dyson (2005) have followed the production approach or have included these

variables in their studies. For the intermediation approach, the inputs are the amount of

deposits and interest and charges paid. As outputs, we include loans, interest and fees

received and the inverse of impairments. The intermediation approach with these inputs

and outputs has been used by Maudos et al. (2002a), Carbo et al. (2003), Cuesta and

Zofío (2005), Illueca et al. (2009), Williams et al. (2011) and Pina et al., (2016), among

others.

After running the DEA model, we have calculated the Malmquist index for the period

2009 to 2013. The Malmquist index makes use of distance functions to measure

productivity change over time, and can be multiplicatively decomposed into an

efficiency change index and a technological change index.


Caves et al. (1982) proposed that the Malmquist index between time periods t and

(t + 1) can be defined as:

where D represents the distance function and the value of M is the Malmquist index.

The first ratio measures the productivity change from period t to period (t + 1) using

period t technology as a benchmark. The second ratio measures the productivity change

from period t to period (t + 1) using period (t + 1) technology as a benchmark. From an

input-orientated perspective, a value of M less than one denotes productivity growth, a

value greater than one indicates productivity decline, and M equal to 1 corresponds to

stagnation.

5. Results of the study

In this section, the results obtained using the DEA and Malmquist methodology are

presented. Table 1 shows the descriptive statistics of the variables included in the

analyses. As can be seen, all the indicators, except for the negotiable securities,

experienced a significant decline in terms of their mean during 2009-13, evidencing the

banking activity downturn in this period. The growth in the volume of negotiable

securities is mainly due to the intensive purchase of public debt. Spanish Government

bonds held by Spanish banks increased from 165,000 million euros in 2011 to 300,000

million euros in 2013 (Deutsche Bundesbank, 2013). The other positive figure is the

42% reduction over the period of the impairments of financial assets. The statistical

magnitudes (std dev, max and min) reflect the great heterogeneity of the Spanish

banking system, particularly the differences between the biggest and smallest entities.

[Insert Table 1 about here]


Table 2 presents the results of the production approach.

[Insert Table 2 about here]

As can be seen, the results of the constant returns to scale (CRS) model in 2009 show

that Banco Santander, Bankia and Bankinter constitute the efficient frontier. So, neither

the size nor the nature of banking entities are per se factors that explain differences in

efficiency because the efficient DMUs are a big bank (Banco Santander), a savings bank

(Bankia) and a small bank (Bankinter). However, the three least efficient DMUs –below

60%– are the smallest entities in the sample. All the other entities obtain efficiency

scores between 70% and 86%. The analysis of efficiency with the variable returns to

scale (VRS) model shows similar results to the CRS model and, as a consequence, the

scale efficiency (CRS/VRS) is close to 100% for most entities, which indicates that they

are operating on an appropriate scale and that size is not the cause of their inefficiencies,

with the exceptions of Caja Pollença and Caja Ontinyent. Both these entities, the two

remaining saving banks in the sample, show a low efficiency scale, which suggests that

the size of these entities is smaller than the optimum.

Bankinter and Bankia are the only entities that obtain the maximum efficiency score in

2013. Although, by this year, all the banks had reduced both the number of branches

and the number of employees, Bankinter has significantly increased the amount of its

deposits and loans while the efficiency of Bankia is based on the variable negotiable

securities, the amount of which increased by 64% during 2009-13, proportionately

higher than the rest. It should be highlighted that the increase of the resources of Bankia

after the merger was mainly due to the public financial assistance it received. Bankia

was recapitalised in 2012 with more than €20bn of public money from the FROB. In the

other entities, the decrease of branches and staff was accompanied by lower deposits

and loans, except for Banco Popular, Banca March and Banco Sabadell whose deposits
increase. As a consequence, there is a wider gap in 2013 than in 2009 between the

efficiency of Bankinter and Bankia and the rest, which have scores of lower than 85%.

In contrast to 2009, the VRS model for 2013 shows significant differences in Banco

Santander, BBVA, La Caixa, Bankia and Caja Pollença, which obtain a score of 100%,

while others obtain similar scores to the CRS model. As a consequence, the evaluation

of the scale efficiency allows us to identify a group of entities made up of Banco

Santander, BBVA, La Caixa, Popular, Sabadell, Caja Pollença and Caja Ontinyent

whose inefficiency can be explained by their size. For the other entities, inefficiency is

due to other causes. Scale inefficiencies arise for 5 of the 6 biggest Spanish financial

entities and for the 2 smallest.

Finally, the Malmquist index, which shows the evolution of the efficiency, reveals that

all entities have improved their productive efficiency in the period analysed, especially

Banca March, Caja3 and Caja Pollença. During this period, financial entities drastically

reduced the number of branches and staff to save costs and compensate for the

prolonged contraction of their commercial activity.

Table 3 presents the results of the intermediation approach.

[Insert Table 3 about here]

The analysis of efficiency with the CRS model shows that Banco Santander, Bankia,

Banco Sabadell, Bankinter and Caja Pollença are the most efficient entities in 2009.

Once again, the results indicate that the size and the nature of entities are not factors that

explain inefficiency. In this model, the maximum score obtained by one of the smallest

entities, Caja Pollença, indicates that a company can be small and efficient when it

manages its resources adequately. Unicaja and Caja3 obtain the lowest scores (around

65%), which indicates that these entities are not able to profitably transform deposits

into loans. The VRS model confirms the results from the CRS model, except that
BBVA now obtains a score of 100%. Similar to the production approach, the scale

efficiency is close to 100% for most of the entities. So, the size of each entity is

appropriate to acting as intermediaries in this sector.

Banco Popular, Banco Sabadell, Caja Pollença and Caja Ontinyent are the efficient

DMUs in 2013. Among the less efficient entities, Banco Santander, BBVA, La Caixa

and Bankia obtain a score of around 60%, which is 30% less than the efficiency they

obtained in 2009. These results show that the bigger Spanish banks have not run their

businesses efficiently or fulfilled their function as intermediaries. The scale efficiency is

especially low for Banco Santander, BBVA and La Caixa. This indicates that these

entities do not operate with an optimum scale and their size may be encumbering their

efficiency.

The Malmquist index for the intermediation approach presents higher scores than for

the production approach. This indicates that the efficiency of the sample in the period

2009-2013 has deteriorated considerably and that the traditional banking business

(granting credit and capturing deposits) has been run inefficiently.

6. Discussion

This paper studies the effect of bank consolidation on the efficiency of Spanish banking

entities. To analyse how the process of mergers in Spain has influenced efficiency, we

have run two DEA models (production and intermediation approaches) for 2009 and

2013 and calculated the Malmquist index for both approaches. Our findings indicate

that the efficiency of banks from the production approach improved in the period 2009-

2013, the period in which the mergers took place, but it did not improve from the

intermediation approach. These results show that the performance of the financial

entities is a multifaceted concept and, as a consequence, its measurement must be

addressed from different approaches. Although there is a vast literature analysing the
efficiency of financial institutions, most studies focus on just one of these dimensions,

giving only a partial view of their performance. The experience of the Spanish banking

system reveals that production and intermediation are different and independent aspects

of the activity of financial entities. The analysis of the restructuring of the Spanish

banking system that began after its collapse in 2009 leads to different conclusions

depending on the perspective adopted.

From the point of view of the services production activity of entities (production

efficiency), the reforms undertaken have contributed to improving the efficiency of the

system, encouraging a more rational allocation of inputs and outputs. The extraordinary

expansion of most of the financial entities in the years prior to the crisis led to an excess

of capacity in the Spanish banking industry (Carbó and Rodríguez, 2016). Thus, the

restructuring of the Spanish financial system was necessary to rebalance the supply and

demand of financial entities. As we know, mergers and acquisitions in the Spanish

banking industry during the 90s, when the number of banks and saving banks fell from

around 80 to 51, did not lead to significant improvements in their efficiency (Fuentes

and Sastre, 1999). This is coherent with the hypothesis of Palomo and Sanchis (2010)

who argue that mergers are more successful when they are underpinned by reasons of

economic rationality and not when they respond to the growth and expansion of the

financial entities, as was the case in the 90s. The consolidation process initiated in 2009

has increased the concentration of the banking industry, enabling financial entities to

reduce the number of employees and branches by concentrating part of their operational

activity in central departments. At the same time, the public aid of around 60,000

million euros that was injected into the banks and the purchase of part of their toxic

assets and non-performing loans by the Spanish “bad bank” (SAREB), created in 2012,

have contributed to cleaning up the banks’ balance sheets and to underpinning the
banking business. Furthermore, the reforms in the Spanish banking system seem to have

been well-planned because, with few exceptions, the entities maintain similar rankings.

From the point of view of the intermediation activity (intermediation efficiency), the

results show a decline in the productivity of all financial entities during the period

analysed. This means that the efficiency of the sample has fallen and that the traditional

banking business (granting credit and capturing deposits) has been run inefficiently. So,

the measures implemented in the Spanish banking system have proven to be ineffective

or, at least, not sufficient to revitalise the financial system and to make the entities

profitable again. As a consequence, uncertainty persists about the survival of some

banks and it seems clear that new reforms will be needed. There are some factors which

may help explain the increasing pressure on the banking industry and the consequent

delay of a return to profits for many financial institutions at European level and,

particularly, in Spain. First, the current prolonged period of low interest rates has a

negative impact on the profitability of banks because it diminishes their margins and

banks have to take higher risks to increase profits (Bachiller et al., 2016). The negative

impact of this current low interest rate environment is more severe in banking systems

that, like the Spanish, have a high degree of reliance on the traditional banking model.

For the smallest banks in Spain, it is even more difficult to compensate for these lower

margins with other activities (Ocaña and Faibiscenko, 2016). Nevertheless, the results

of this study do not corroborate this perspective because four of the biggest banks show

the worst performance evolution. Second, the stricter financial regulation imposed by

the central banks with the aim of increasing the transparency and solvency of banks may

be having a negative impact on their capacity to augment credit flows and productive

investments. Moreover, as the European economy is still weak, banks are more cautious

when analysing risks. This indicates that the improvement in solvency has been to the
detriment of profitability. Finally, the drastic deterioration of the Spanish economy

during the period analysed, with an unemployment rate rising from 13.8% in 2008 to

25.7% in 2013, brought about an ongoing fall in domestic demand. As a consequence,

the rate of non-performing loans grew from 4.97% in 2009 to 13.77% in 2013 and bank

lending fell into a vicious circle of less funding, less demand and greater arrears.

The analysis shows that neither the size nor the nature of the banking entities are per se

factors that explain differences in efficiency because the efficient DMUs include a big

bank (Banco Santander), a savings bank (Bankia) and a small bank (Bankinter). So, a

company can be small and efficient if it manages its resources adequately, that is, if it is

able to profitably transform deposits into loans.

7. Conclusions

The efficiency of banking entities has multiple dimensions and not all of them are

necessarily correlated. Therefore, studies that analyse efficiency must limit the scope of

their conclusions to the dimensions addressed.

The comparative analysis undertaken demonstrates that, despite the deep reforms

carried out in Spain, the efficiency of the banking sector maintains a similar ranking to

that which it had at the beginning of the period analysed only from the point of view of

the production approach. This shows that the reforms have acted proportionately

through the banking system, avoiding the closing of institutions. Furthermore, entities

that do not operate on an optimum scale can be profitable, for instance, when they offer

specialized treatment for specific niche markets. So, the future performance of Spanish

banking groups will depend on their capacity to promote a profitable business and select

the best investment opportunities.


The consolidation of the Spanish banking sector has contributed to improving the

productive efficiency of entities by rationalising the available resources. Mergers have

been carried out to save costs and not to increase market share or eliminate competitors’

power. However, at the same time, the strong contraction in the main activity of the

financial institutions, granting credits, has led to a decrease in efficiency from the point

of view of intermediation. The current macroeconomic context, in particular the low

interest rates and high default rates, has affected the profitability of the banking

business. This will have to be corrected to maintain the sustainability of some entities

and, in the case of Bankia, to pay back the financial aids given by Europe. Meanwhile,

new mergers of banks cannot be ruled out.

This study identifies some interesting implications for policymakers; because, when

considering the process of banking mergers to strengthen this sector, economic issues

other than growth and expansion criteria should be taken into account. Some questions

that arise for future research are the influence of the regulation on the performance of

banking entities and the analysis of the banking sector after transnational mergers. The

consolidation of this sector is still at an intermediate stage.


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Table 1: Input and output variation of the Spanish financial entities in the period 2009-2013

%
2009 2013 VARIATION
Mean max min std dev Mean max min std dev 2009-13
Branches 2,220 8,597 21 2,302 1,413 5,647 20 1,576 -36%
Staff 12,909 39,557 87 12,617 9,059 30,437 80 9,96 -30%
Deposits
(thousands €)
77,758,455 240,156,183 289,16 79,050,045 67,565,156 207,374,182 380,8 69,375,894 -18%
Loans
93,849,407 303,241,679 274,87 99,680,666 64,636,930 215,120,571 291,91 73,379,320 -31%
(thousands €)
Securities
29,254,240 125,585,781 42,062 39,540,268 34,273,227 137,470,951 55,131 44,191,448 17%
(thousands €)
Interest paid
(thousands €)
2,968,900 9,757,704 9,126 3,200,658 1,791,765 7,614,325 7,732 2,281,591 -40%
Interest
income 5,749,300 18,185,211 19,803 6,269,711 3,712,605 12,506,649 19,615 4,065,603 -35%
(thousands €)
Impairment of
financial
assets
1,850,705 11,582,068 1,704 2,907,325 1,064,718 4,196,919 2,125 12,683,303 -42%
(thousands €)
Source: Author’s elaboration from Spanish banking association annual reports
Table 2: Coefficients of technical efficiency and Malmquist Index (Production approach)

2009 2013 Malmquist Index

Technical Technologic
CRS VRS CRS/VRS CRS VRS CRS/VRS Malmquist
change al change

Banco Santander 100.00% 100.00% 100.00% 85,31% 100,00% 85,31% 1,172 0,821 0,963

BBVA 86,47% 100,00% 86,47% 69,71% 100,00% 69,71% 1,240 0,708 0,878

La Caixa 73,20% 73,20% 100,00% 58,90% 100,00% 58,90% 1,243 0,706 0,878

Bankia 100,00% 100,00% 100,00% 100,00% 100,00% 100,00% 1,000 0,862 0,862

Banco Popular 70,85% 70,95% 99,86% 60,69% 87,71% 69,19% 1,167 0,689 0,804

Banco Sabadell 76,38% 84,07% 90,85% 53,17% 79,07% 67,24% 1,437 0,683 0,980

Banca March 54,98% 58,32% 94,27% 61,20% 64,18% 95,36% 0,898 0,682 0,613

Bankinter 100,00% 100,00% 100,00% 100,00% 100,00% 100,00% 1,000 0,967 0,967

Unicaja 72,12% 72,52% 99,45% 58,41% 58,68% 99,54% 1,235 0,664 0,820

Kutxa 82,83% 83,63% 99,04% 69,46% 69,51% 99,93% 1,192 0,678 0,809

Ibercaja 77,20% 78,05% 98,91% 69,87% 70,56% 99,02% 1,105 0,696 0,769

Caja 3 73,74% 75,27% 97,97% 77,67% 79,62% 97,55% 0,949 0,718 0,682

Liberbank 80,40% 80,96% 99,31% 56,25% 56,31% 99,89% 1,429 0,664 0,949

Banco Mare Nostrum 78,36% 78,78% 99,47% 65,37% 65,56% 99,71% 1,199 0,680 0,815

Nova Caixa Galicia 80,08% 80,55% 99,42% 73,69% 74,25% 99,25% 1,087 0,711 0,772

Caja de Ahorros de Pollença 44,14% 100,00% 44,14% 39,97% 100,00% 39,97% 1,104 0,664 0,733

Caja de Ahorros y M. P. de Ontinyent 46,98% 68,37% 68,71% 36,75% 63,21% 58,14% 1,278 0,696 0,890
Appendix 1

Banking sector consolidation in Spain

2009 2013

Banesto
SANTANDER
Banco Santander

Caixa d´Estalvis de Catalunya

Caixa d'Estalvis Comarcal de Manlleu

Caixa d´Estalvis de Tarragona

Caixa d´Estalvis de Terrassa BBVA

Caixa d´Estalvis de Manresa

Caixa d´Estalvis de Sabadell

BBVA

Caixa d´Estalvis i Pensions de Barcelona.

Caja de Ahorros Municipal de Burgos

Caixa d´Estalvis de Girona

Caja de Ahorro Provincial de Guadalajara


LA CAIXA
Caja de Ahorros y Monte de Piedad de Navarra

Caja General de Ahorros de Canarias

Caja de Ahorros Provincial San Fernando de Sevilla y Jerez

Banco de Valencia

Caja de Ahorros y M. P. de Ávila

Caja de Ahorros de la Rioja

Caja de Ahorros y M. P. de Madrid

Caixa d´Estalvis Laietana BANKIA

Caja Insular de Ahorros de Canarias

Caja de Ahorros y M. P. de Segovia

Bancaja

Banco Popular

Banco Pastor BANCO POPULAR


Caja Mediterráneo

Caja de Ahorros y M. P. de Gipuzkoa y San Sebastían SABADELL

Banco Sabadell

Banca March BANCA MARCH

Bankinter BANKINTER

Caja Provincial de Ahorros de Jaén

Caja España de Inversiones, Caja de Ahorros y M. P.


UNICAJA
UNICAJA

Caja de Ahorros de Salamanca y Soria - Caja Duero

Bilbao Bizkaia Kutxa

Cajasur KUTXA

Caja de Ahorros de Vitoria y Álava

Ibercaja IBERCAJA

Caja de Ahorros de la Inmaculada de Aragón

Monte de Piedad y Caja General de A. de Badajoz


CAJA 3
Caja de A. y M. P. del Círculo Católico de Obreros de
Burgos

Caja de Ahorros y M. P. de Extremadura

Caja de Ahorros de Castilla la Mancha


LIBERBANK
Caja de Ahorros de Asturias

Caja de Ahorros de Santander y Cantabria

Caja General de Ahorros de Granada

Caja de Ahorros de Murcia


MARE NOSTRUM (BMN)
Caja de Ahorros y M. P. de las Baleares

Caixa d´Estalvis del Penedés

Caja de Ahorros de Galicia


NOVA CAIXA GALICIA
Caixa de Aforros de Vigo, Ourense y Pontevedra

Caja de Ahorros de Pollença Caja de Ahorros de


POLLENÇA

Caja Ontinyent Caja ONTINYENT

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