Journal of Applied Economic Research
ISSN 2712-7435
Review of Modern Approaches for Assessing the Effectiveness of Banking
M.V. Leonov
Kalashnikov Izhevsk State Technical University
Abstract
In the current circumstances of digital transformation of the economy, the study of the efficiency of commercial banks is widely demanded and provides an opportunity for identifying the prerequisites for the formation of a sustainable financial system. Despite the large number of scientific publications in this field, there are no systematic studies that summarize the existing methodological framework for the study of the effectiveness of banking activities. The purpose of the article is to critically analyze the approaches to assessing the efficiency of banking activities and prospects for its improvement in the digital economy. The complexity of assessing the effectiveness of commercial banks consists in the multiplicity of forms of output and resources used for this process. In this study, the author puts forward a hypothesis that the implementation of modern approaches and methods to assess the effectiveness of banking activities can improve the accuracy of the assessment itself, and help identify factors that increase the effectiveness of such activities. The article is based on English-language scientific papers published in between 2016 and 2020 and indexed in the international scientometric database «Web of Science». The author applies the method of systematic bibliographic study of the set of publications, highlights the main discussion issues of the recent years, namely, research methodology, internal efficiency factors, country specifics of banking activities. The article reveals the content, certain issues, and the limits of the applicability of the nonparametric method of data envelopment analysis and the parametric method of stochastic frontier analysis in assessing the effectiveness of activities. Particular attention is paid to the generalization of research results in terms of identifying factors that have a significant impact on the effectiveness of commercial banks: ownership structure, returns to scale, regulation. The author highlights the increasing role of information technology as a key production factor, highlights the phenomenon of breaking the value chain in banking activities, the formation of new business models and the functioning of banking ecosystems. The scientific and practical significance of the article lies in the gain of knowledge, which might provide the basis for the development of measures to improve banking regulation, as well as serve as the framework for the identification of the most effective forms of banking intermediation.
Keywords
banking efficiency; banking regulation; nonparametric frontier estimation; stochastic efficiency fron-tier; banking ecosystem; literature review.
JEL classification
G21, G28References
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Acknowledgements
The reported study was funded by RFBR, project number 20–110-50055 (Competition for financial support for the preparation and publication of scientific review articles «Expansion»).
About Authors
Leonov Mikhail Vitalyevich
Candidate of Economic Sciences, Associate Professor, Department of Economics and Finance, Kalashnikov Izhevsk State Technical University, Izhevsk, Russia (426069, Izhevsk, Studencheskaya street, 7); ORCID 0000-0002-2251-0437; e-mail: leonov@istu.ru.
For citation
Leonov M.V. Review of Modern Approaches for Assessing the Effectiveness of Banking. Journal of Applied Economic Research, 2021, Vol. 20, No. 2, P.294-326. DOI: 10.15826/vestnik.2021.20.2.013.
Article info
Received May 2, 2021; Revised May 31, 2021; Accepted June 10, 2021.
DOI: http://dx.doi.org/10.15826/vestnik.2021.20.2.013
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