Abstract

The banking sector is one of the most important components of the financial markets in Georgia as well as in many other countries. The purpose of this study is to examine the efficiency of 15 commercial banks in the Georgian banking sector between 2013 and 2017 by using Data Envelopment Analysis. In the study, the efficiency scores of the banks were calculated according to input-orientated CCR model under the assumption of constant returns to scale, using three inputs (total deposits, total capital, total expenses) and three outputs (total loans, total incomes, net profit). The findings of the study show that banks' efficiency levels are high in general and five banks have full efficiency levels in each year of the analysis period. When the findings of the study were evaluated, it was seen that the efficiency in the Georgian banking sector increased in 2013-2015 years and it started to decline again in 2016-2017. In other words, in terms of average efficiency scores, while the efficiency levels of banks ranged from 96.71% to 84.51%, the efficiency levels increased by 12.2% from 2013 to 2015 year and decreased by 6.6% from 2015 to 2017 year.