Measuring the Cost Efficiency of Banks Operating in the MENA Region

Kassem, Mohammad and EL-Moussaw, Chawki i and Awdeh, Ali (2014): Measuring the Cost Efficiency of Banks Operating in the MENA Region. Published in: International Research Journal of Finance and Economics No. 124 (2014): pp. 20-35.

Abstract

This paper tried to model the efficiency of banks operating in the MENA region between 2005 and 2011, using the stochastic frontier technique. The sample under study included banks from 11 different MENA countries. The empirical results show that – on average – those banks could save up to 19% of their consumed resources while producing the same level of outputs. We also find a wide difference in efficiency among the MENA banking sectors, with scores ranging between 55% (for Egypt) and 97% (for UAE). Finally, by detecting the impact of several internal and external factors on the efficiency scores, we find that economic growth, inflations rates, corruption, exchange rates, trade openness, size of the government, bank capital, and bank profitability, all have a significant impact on bank efficiency.

• Item Type: MPRA Paper
• Language: English
• Keywords: Stochastic Frontier; Efficiency; Productivity.
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure

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