Operating performance of the banking industry: an empirical investigation of the south eastern European region

This paper examines the operating performance of the South Eastern European(SEE) banking industry over the period 1998-2003. To this end, we investigate the empirical relationship between operating expenses and bank, market and country specific characteristics. Operating performance is found to be positively related to loan quality and the asset size or the bank’s market share, and negatively related to liquidity, the loan ratio and bank’s age.