Testing the Efficiency of Turkish Banks

This paper reports results from the application of Data Envelopment Analysis (DEA) on Turkish commercial banks. The aim of this paper is twofold. First, to measure the “intermediation” efficiency and profitability of Turkish banks. Second, to examine the relationship between efficiency and profitability. The results of the research generally indicate that the Turkish banking sector operates profitably despite its inefficiency from an intermediation perspective. The results also show that in an environment with low interest rates, low public borrowing requirements and severe competition, the number of bank failures is expected to increase.