Measuring Efficiency Performance of Commercial Banks in Ethiopia: A Data Envelopment Analysis Approach

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Date

2008-06

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A.A.U

Abstract

This study concentrates on the efficiency performance of commercial banks in Ethiopia by examining the efficiency. Changes in productivity and technology. and potential determinants of the efficiency of a sample of eight commercial banks during the period 2002/2003-2006/2007. In measuring the efficiency of commercial banks data envelopment analysis has been employed. The efficiency scores for the technical efficiency. allocative efficiency. cost-efficiency. and scale efficiency were found to be 97.68%. 90.24%. 88.5%. and 93.22% respectively. The Malmquist total factor productivity index showed that on average productivity has been growing by 2.1 % and the growth in technology change was on average 2.4%. Results from the censored to bit Model showed that return on equity. Total capital total asset. gross profit. Real CDP. Number of bank branches. Deposits. The growth rate of loans. the growth rate of the number of branches. The number of micro-finance institutions. The growth rate of gross profit. and thegrowtl1 rate of returns on asset had a statistically Significant effect on at least one of the efficiency scores. Though The commercial banks were found to be inefficient. There has been an Improvement in productivity and technology change over the study period.

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Keywords

Efficiency, Measuring

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