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Size And Returns To Scale Of Non-Bank Financial Institutions: Empirical Evidence From Malaysia

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Author Info
Fadzlan Sufian

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Abstract

By applying the non-parametric Data Envelopment Analysis (DEA) method, this paper attempts to investigate the efficiency of Malaysian Non-bank Financial Institutions (NBFIs) during the period of 2000-04. The results suggest that the merchant banks have exhibited mean overall efficiency of 78.1%, while the finance companies’ mean overall efficiency was 91.3%. The results suggest that during the period of the study, pure technical inefficiency, rather than scale inefficiency, has largely resulted in Malaysian NBFIs’ overall inefficiency. Examination of the sample of 80 observations over the five-year period revealed that while, on average, 28.75% of all Malaysian NBFIs were operating at Constant Retuns to Scale (CRS), the majority, i.e., 71.25%, were scale inefficient (operating at Decreasing Returns to Scale (DRS) or Incresing Returns to Scale (IRS).

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Publisher Info
Article provided by Icfai Press in its journal The IUP Journal of Managerial Economics.

Volume (Year): IV (2006)
Issue (Month): 3 (August)
Pages: 26-41
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Handle: RePEc:icf:icfjme:v:04:y:2006:i:3:p:26-41

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This page was last updated on 2009-12-16.


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