Efficiency in the Brazilian banking industry: A data envelopment analysis approach

This study assesses technical efficiency in commercial and multiple categories of the Brazilian banking industry. Data Envelopment Analysis (DEA) based on constant returns to scale has been processed using data from 1995 to 2004 provided by the Central Bank of Brazil.; The software DEAP was applied, featuring total IT expenses as the input variable, which incorporates the following accounts: Communication Expenses, Data Processing Systems, and Systems Acquisition and Development Expenses, and total of deposits as a single output variable. Also, DEAP generated the Malmquist total productivity indexes (TFP) based on the same input and output variables. It differs from earlier studies by examining efficiency and productivity by origin of capital and ownership, and finds the public institutions more efficient than the private ones. However, it can be seen a gradual equalization of the technical efficiency for both segments.; In addition, the multiple public state-controlled category had the highest efficiency mean, while the commercial private foreign-controlled had the lowest efficiency mean.; In regard to the changes in productivity, the private foreign-controlled segment had{09}the highest TFP index, while the public state-controlled had the lowest one. Regarding ownership, the private segment{09}had a higher TFP index than the public sector. Considering only the origin of capital, private foreign-controlled sector had higher TFP index than the private nationally-owned sector.