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Cost-efficiency and financial and geographical characteristics of banking sectors in the MENA countries

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  • Idries M. Al-Jarrah
  • Khalid S. Al-Abdulqader
  • Shawkat Hammoudeh

Abstract

We utilize the translog stochastic frontier model to estimate the cost-efficiency levels for conventional and Islamic, Cooperation Council (GCC) and non-GCC banks in the Middle East and North African (MENA) countries. The estimated cost-efficiency averages around 77% for those MENA banks, but with slight changes in this score for the individual countries. The results also show that the banks in the GCC countries are the most efficient in the region and the efficiency scores for the conventional and Islamic banks are similar. Finally, the recent financial crisis seems to have a slight impact on the observed efficiency scores of those banks.

Suggested Citation

  • Idries M. Al-Jarrah & Khalid S. Al-Abdulqader & Shawkat Hammoudeh, 2017. "Cost-efficiency and financial and geographical characteristics of banking sectors in the MENA countries," Applied Economics, Taylor & Francis Journals, vol. 49(35), pages 3523-3537, July.
    • Handle: RePEc:taf:applec:v:49:y:2017:i:35:p:3523-3537
    DOI: 10.1080/00036846.2016.1262524
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    References listed on IDEAS

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    1. J. David Cummins & Mary A. Weiss, 1998. "Analyzing Firm Performance in the Insurance Industry Using Frontier Efficiency Methods," Center for Financial Institutions Working Papers 98-22, Wharton School Center for Financial Institutions, University of Pennsylvania.
    2. Robert DeYoung & Kenneth Spong & Richard J. Sullivan, 1995. "What makes a bank efficient? : a look at financial characteristics and management and ownership structure," Financial Industry Perspectives, Federal Reserve Bank of Kansas City, issue Dec, pages 1-19.
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    Cited by:

    1. Mohamed E. Chaffai, 2022. "New evidence on Islamic and conventional bank efficiency: A meta‐regression analysis," Bulletin of Economic Research, Wiley Blackwell, vol. 74(1), pages 221-246, January.
    2. Ahmed Khalifa, Massimiliano Caporin, Michele Costola, and Shawkat Hammoudeh, 2021. "Systemic Risk for Financial Institutions in the Major Petroleum-based Economies: The Role of Oil," The Energy Journal, International Association for Energy Economics, vol. 0(Number 6).

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