**6. Concluding Remarks**

The present study modeled banking operations as consisting of two stylized stages—the deposit mobilization stage, and the loan financing stage—and separately estimated technical efficiency at each stage. An important feature of the study was the use of a cross-country panel dataset for efficiency measurement. To the best of our knowledge, no other study estimated technical efficiency for a panel or emerging economy banks using network DEA and directional distance functions featuring NPLs. This research design made it possible to perform regional comparisons of bank efficiency and also to investigate the impact of global macroeconomic shocks. Our results indicated that lower efficiency scores were concentrated in regions where the proportions of non-performing loans in banks' loan portfolios were higher.

The results obtained allowed not only profiling the efficient banks, but also a meaningful characterization of the macroeconomic environment conducive for achieving higher levels of bank efficiency. The efficient banks were smaller, better capitalized, and privately owned. The macroeconomic conditions conducive for bank efficiency were a growing economy, and low to moderate inflation rates (below ~5%). The financial crisis of 2007–2008 negatively impacted the technical efficiency of banks. The analysis of regional patterns of efficiency scores suggested that the most vulnerable banks were located in regions (South Asia and emerging Europe) where the proportion of non-performing loans was high.
