Italian banks show high efficiency, but size matters for profitability.
The study looked at how efficient Italian banks were in making profits and managing costs from 2006 to 2011. They used a method called translog stochastic frontiers to measure this. The results showed that, on average, Italian banks were around 90% efficient in both making profits and managing costs during this time. However, there were differences between banks based on their size, legal type, and location in the country. Larger banks tended to be less efficient, cooperatives performed better, and banks in the North East of Italy were the top performers.