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Technical efficiency in Botswana’s financial institutions: a DEA approach

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Author Info
Moffat, Boitnmelo (University of Wollongong)
Valadkhani, Abbas () (University of Wollongong)
Abstract

This paper examines technical and pure technical efficiencies of ten major financial institutions in Botswana for each year during the period 2001-2006 using data envelopment analysis. In order to obtain more robust and reliable results, the sensitivity of our efficiency indices were put into test by choosing three alternative approaches in specifying the mix of inputs and outputs. The empirical results indicate that: (a) no matter which approach and year are taken into consideration, Baroda and FNB (which are both foreign banks) and BSB (which is a publicly owned institution) are consistently among the most efficient institutions and BDC, ABC and NDB are the least efficient ones; (b) the most efficient banks are either small or large institutions in terms of their asset sizes; (c) due to the small sample size, the evidence of a relationship between the age of institutions and their technical efficiencies remains inconclusive. One can conclude that financial institutions can further enhance efficiency by adopting self-service technologies such as telephone and internet banking which can substantially reduce their service delivery costs.

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Paper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number wp08-14.

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Length: 21 pages
Date of creation: 2008
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Handle: RePEc:uow:depec1:wp08-14

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Postal: School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia
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Web page: http://www.uow.edu.au/commerce/econ/
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Related research
Keywords: Botswana; Technical efficiency; Data envelopment analysis; financial institutions.;

Find related papers by JEL classification:
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
G2 - Financial Economics - - Financial Institutions and Services

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