Since 2014
Cost Efficiency of Ethiopian Banks
The Ethiopian Journal of Business and Economics
View Archive Info| Field | Value | |
| Title |
Cost Efficiency of Ethiopian Banks
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| Creator |
Lelissa, Tesfaye
Mohammed, Abdurezak |
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| Subject |
Cost; Efficiency; Ethiopian Banks; DEA
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| Description |
The study has explored the efficiency level of banks using cost models. It has used the Data Envelopment Analysis score to examine the efficiency level of banks under both constant and return of scale. In addition, it has explored the scale efficiency of all the models with a statistical test on the significance of variation among Ethiopian Banks. The study finds that banks efficiency level has witnessed a wide variation across various bank groupings. The study has also found outs that the state banks efficiencyhas been consistently on the efficiency frontier reflecting the high dominance of the banks in the Ethiopian banking system. In addition, the study finds that the small private banks efficiency is growing overtime while the middle size private banks arefacing difficulty to improve their level of efficiency. The parametric and nonparametric tests also witness that state and private banks possess different management and technology capabilities. This shows that despite the scale advantage the state banks have, the difference in their management and technology capabilities has contributed for better efficiency performances. On the other front, the statisticaltest on efficiency determinants shows that deposit growth rate, loan size and earning asset growth are positively and significantly related to efficiencies. Nevertheless, branch size and fixed asset growth rate are negatively and insignificantly related to efficiencies. Consistent to such finding, the benchmarking practice suggests that banks holding excessive deposits limiting their intermediation activities are disadvantaged to count on their efficiency performances. Some of the results from this section of the study such as top efficiency score of state banks and efficiency determinants are unexpected and are explained further in the qualitative study as to their reasons.
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| Publisher |
College of Business and Economics, Addis Ababa University
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| Contributor |
—
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| Date |
2019-03-25
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Peer-reviewed Article |
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| Format |
application/pdf
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| Identifier |
https://www.ajol.info/index.php/ejbe/article/view/184936
10.4314/ejbe.v6i2.1 |
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| Source |
Ethiopian Journal of Business and Economics (The); Vol 6, No 2 (2016); 125-158
2410-2393 2311-9772 |
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| Language |
eng
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| Relation |
https://www.ajol.info/index.php/ejbe/article/view/184936/174273
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| Rights |
This content is licensed under Attribution-NonCommercial-NoDerivs CC BY-NC-ND.
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