Estimation of the cost and profit efficiency of the Slovak banking sector

The paper estimates the cost and profit efficiency of the Slovak banking sector during the period 2003-2012. The paper employs the parametric approach, in particular the Stochastic Frontier Approach, to estimate the cost and profit efficiency of individual banks in the Slovakia. The analysis is based on data banks representing almost 80 percent of the total banking assets in the Slovak banking sector. We obtained data from BankScope database and annual reports of 12 Slovak banks. The average cost and profit efficiency was decreasing in the Slovak banking sector during the analyzed period. Estimates of the average cost efficiency ranged the value 29-92% and the average profit efficiency ranged from 56-93%.