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Determinants of operational efficiency: the case of Saudi Banks

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  • Khan Shoaib

    (Department of Economics & Finance, College of Business Administration, University of Ha’il, Hai’l, Saudi Arabia, email: shoaibapu16@gmail.com)

Abstract

The study determines the factors that can affect the operational efficiency of Saudi commercial banks. It uses the data of listed banks from the period 2010 to 2017. The panel data estimation technique of pooled ordinary least squares is used with random and fixed effects estimations to find the significant factors. Based on the Hausman test (1978) fixed effects estimation results are used for discussion. The operational efficiency of Saudi banks is influenced by the same factors highlighted for different economies, with a certain exception. Capital adequacy, profitability, and bank size have an adverse influence on operational efficiency. Contrary to this it is positively related to liquidity and asset quality. The results of the study will be useful for policymakers and bank managers to support the effective role of banks in the improvement of the financial sector which is also part of the Kingdom’s vision 2030 development plan.

Suggested Citation

  • Khan Shoaib, 2022. "Determinants of operational efficiency: the case of Saudi Banks," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 18(3), pages 11-20, September.
    • Handle: RePEc:vrs:finiqu:v:18:y:2022:i:3:p:11-20:n:4
    DOI: 10.2478/fiqf-2022-0016
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    More about this item

    Keywords

    banks; operation efficiency; capital adequacy; liquidity; vision 2030;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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