Record Details

Cost Efficiency of Ethiopian Banks

The Ethiopian Journal of Business and Economics

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Field Value
 
Title Cost Efficiency of Ethiopian Banks
 
Creator Lelissa, Tesfaye
Mohammed, Abdurezak
 
Subject Cost; Efficiency; Ethiopian Banks; DEA
 
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.
 
Publisher College of Business and Economics, Addis Ababa University
 
Contributor
 
Date 2019-03-25
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://www.ajol.info/index.php/ejbe/article/view/184936
10.4314/ejbe.v6i2.1
 
Source Ethiopian Journal of Business and Economics (The); Vol 6, No 2 (2016); 125-158
2410-2393
2311-9772
 
Language eng
 
Relation https://www.ajol.info/index.php/ejbe/article/view/184936/174273
 
Rights This content is licensed underĀ Attribution-NonCommercial-NoDerivs CC BY-NC-ND.