The restructuring of the Spanish banking system: analysis of the efficiency of financial entities

Abstract

Purpose

The purpose of this paper is to analyse the performance of Spanish banking entities between 2009 and 2013, a period marked by the reform of the banking system with a large number of mergers and integrations.

Design/methodology/approach

First, efficiency is measured applying the data envelopment analysis (DEA) methodology and, then, the Malmquist index is calculated to assess its evolution.

Findings

The results show that most of the entities have improved their performance from the production approach. However, from the intermediation approach, the efficiency of the sample has deteriorated, which raises questions about the sustainability of the traditional banking business when the current credit restriction strategy is long lasting.

Practical implications

The comparative analysis demonstrates that, after the deep reforms carried out in Spain, the banking entities maintain similar efficiency rankings to those they had at the beginning of the period analysed. This shows that the reform has created new groups that operate adequately, avoiding the closing of institutions. Despite the better rationalisation of the available resources, the outlook for Spanish banks remains unclear in the current macroeconomic context, which does not favour the banking business.

Originality/value

The study contributes to the literature on the Spanish banking system because it adds new empirical evidence about its restructuring and it applies a DEA model to a sample before and after mergers. The authors discuss theoretical and managerial implications and offer suggestions for future research on this field.

Citation

Martín, E., Bachiller, A. and Bachiller, P. (2018), "The restructuring of the Spanish banking system: analysis of the efficiency of financial entities", Management Decision, Vol. 56 No. 2, pp. 474-487. https://doi.org/10.1108/MD-04-2017-0292