Evaluation of Efficiency, Effectiveness and Performance of Russian Banks Using DEA-method

The purpose of this study is to assess the efficiency, effectiveness and performance of the TOP-50 Russian banks using the DEA method and data for the 2017 financial year. The object of this study is the TOP-50 Russian banks. This study is the first to calculate the overall performance indicator of Russian banks using the non-parametric method DEA and the two-step performance assessing model. In this study, a performance indicator is considered as a product of efficiency and effectiveness indicators. Empirical results of research show that only 9 Russian banks out of 50 (18% of the sample) are fully performance and received the highest scores in efficiency and effectiveness aspects. The results of the correlation analysis showed a lack of relationship between efficiency and effectiveness indicators. These results prove that a high level of efficiency does not guarantee a high level of effectiveness for a bank. Also, a strong and significant relationship was found between effectiveness and performance indicators, as well as between efficiency and performance indicators. The Mann-Whitney U-test did not show the statistical significance influence of the bank size on its performance, efficiency and effectiveness indicators. Thus, the empirical results of the study emphasize that for effective banking practice, Russian banks need to pay great attention to methods of generating income and the process of using resources. Keywords: DEA method, Russian banks, efficiency, effectiveness, performance.