Scale Efficiency in the Banking Sector of Pakistan

Usman, Muhammad; Wang, Zongjun; Mahmood, Faiq; Shahid, Humera

doi:10.5539/ijbm.v5n4p104

Cited by 17 publications

(20 citation statements)

References 5 publications

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“…Academic research has accordingly focused on measuring bank efficiency. According to Usman et al (2010) bank efficiency is the best level of output reached without any changes to the amount of input. Efficiency is generally categorised in to two componentsallocative and technical efficiency (Xu, 2011;Ncube, 2009).…”

Section: Literature Reviewmentioning

confidence: 99%

“…In the literature the most favoured efficiency measurement techniques for parametric and non-parametric analysis are respectively the Stochastic Frontier Analysis (SFA) and Data Envelope Approach (DEA). Usman et al (2010) concluded that there is no superior method exists to measure bank efficiency. However, the DEA has been found to have a number of advantages over other methods (Nigmonov, 2010;Khankhoje and Sathye, 2008).…”

Section: Literature Reviewmentioning

confidence: 99%

“…The definition and measurement of inputs and outputs in the banking environment remain a contentious issue (Xu, 2011;Brissimis et al, 2010;Usman et al, 2010;Nigmonov, 2010). Literature distinguishes two fundamental approaches -the production and intermediation approaches -for which there no consensus among researchers.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The production approach defines the traditional inputs such as land, labour and capital as variables used to produce the outputs (Usman et al, 2010;Ncube, 2009). Sathye (2003) observes that the traditional inputs generate the output of deposits and that this is the single most important difference between the two approaches.…”

Section: Literature Reviewmentioning

confidence: 99%

See 3 more Smart Citations

An Empirical Study of Bank Efficiency in South Africa Using the Standard and Alternative Approaches to Data Envelopment Analysis (DEA)

Erasmus

Makina

2014

JEBS

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The paper investigates the efficiency of the major banks of South Africa using the standard and alternative approaches to Data Envelopment Analysis (DEA). The standard DEA approach measures efficiency utilising linear averages of outputs and inputs while the alternative DEA approach utilises nonlinear averages. Individual bank efficiency scores are estimated over the period 2006 to 2012, a period that allows analysis of the efficiency of the banks during the global financial crisis of 2008 to 2009. Under both approaches the majority of the major South African banks were observed to be DEA efficient, with the alternative approach improving the efficiency scores of those banks that were DEA inefficient under the standard approach. The global financial crisis did not affect the efficiency of the majority of the banks. Since the banks were DEA efficient prior the crisis, it could be argued that their efficiency was one of the contributory factors for their resilience during the global financial crisis.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

See 2 more Smart Citations

An Empirical Study of Bank Efficiency in South Africa Using the Standard and Alternative Approaches to Data Envelopment Analysis (DEA)

Erasmus

Makina

2014

JEBS

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“…[9] studied the performance efficiency of the Pakistani banking sector using DEA methodology. Contrary to our study, their work focused on the various types of banks classified as state-owned banks, domestic private banks and foreign owned banks.…”

Section: Literature Reviewmentioning

confidence: 99%

Are Emerging Markets Resilient to Global Financial Shocks? Evidence from Developing Country Banking Sector

Rehman¹

2016

IJTEF

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Abstract-Adverse effects of vulnerability in the financial sector have been seen, yet again, during the financial crisis of 2008 that turned into a domino effect on the international financial markets spreading across the developed world. The misfortune seen by the developed countries spread its wings into all corners of the world, but there seems to be a misunderstanding of the threat arising of such an event in the regulators of some developing countries. Pakistan is one such country. The regime at the time maintained that the country had been insulated from the adverse effects of the crisis on the financial sector. More emphasis was placed on the macroeconomic imbalances due to global rise in commodity and oil prices. The present study aims to show whether or not the financial crisis impacted the performance efficiency of the Pakistani banking sector and whether the effects were short lived or prolonged. This has been achieved using a unique variable selection methodology in data envelopment analysis using the Malmquist index approach which, to the author's best knowledge, has never been used for the purpose of a similar analysis. The results prove that the performance efficiency of the banking sector was indeed effected during the crisis years but were restored to pre-crisis levels soon after. This goes to show that even though the regulators were partially correct in terms of the timeframe effects of the crisis, yet there was a strong impact on the efficiencies that proves that financial sector was indeed impacted and also, if left unchecked, can have dire consequences if any such situation does arise in the future. The conclusion of the study suggests further work needs to be done on the channels of transmission of the crisis on Pakistan.

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An evaluation of commercial banks performance in Pakistan: A comparative analysis

Khan

Shaheen

Waheed

et al. 2020

Journal of Public Affairs

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This study examines the efficiency level of public, private, and foreign banks in Pakistan during 2014-2017 in order to identify the most efficient type of banks on the basis of ownership. The study uses data envelopment analysis methodology.Findings indicate that the efficiency of private and public banks is satisfactory, but they are not fully efficient and there is a scope for improvement in the performance of these banks. The private and public sector banks are equally efficient. Results further show that foreign banks are very efficient and can be used as a benchmark for public and private banks in Pakistan.

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Scale Efficiency in the Banking Sector of Pakistan

Cited by 17 publications

References 5 publications

An Empirical Study of Bank Efficiency in South Africa Using the Standard and Alternative Approaches to Data Envelopment Analysis (DEA)

An Empirical Study of Bank Efficiency in South Africa Using the Standard and Alternative Approaches to Data Envelopment Analysis (DEA)

Are Emerging Markets Resilient to Global Financial Shocks? Evidence from Developing Country Banking Sector

An evaluation of commercial banks performance in Pakistan: A comparative analysis

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