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Determinants of Banks’ Technical Efficiency in Loans Allocation: Evidence from Côte d’Ivoire

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  • Gahé Zimy Samuel Yannick

Abstract

The role of the financial sector is widely discussed in the economic literature. As part of this sector, banks in general and commercial banks specifically are at the front line. They are the first channels to finance the economy of a contry. Their funds come mainly from clients deposits. In an academic paper published some years ago, we assessed the efficiency of commercial banks operating in Côte d’Ivoire in converting deposits into loans. Even though the results were edifying, an important question remained- what are the factors that affect technical efficiency scores obtained? The present paper aims at answering this question. Based on a literature review, we identified several variables likely to impact the scores. Those variables are classified into two main groups. On the one hand, there are variables under the direct control of banks; on the other hand, there are variables that cannot be impacted by a given bank in a context of perfect competition. To conduct our study, we run a multiple regression model using Ordinary Least Squares. The dependent variable is the efficiency score. As per the potential explanatory variables, we take methodically some of those found within the literature in light of the context of the Ivorian bank market. The results reveal that bank specific factors are the most recurrent factors explaining variation in technical efficiency scores.

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  • Gahé Zimy Samuel Yannick, 2021. "Determinants of Banks’ Technical Efficiency in Loans Allocation: Evidence from Côte d’Ivoire," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(1), pages 124-124, January.
    • Handle: RePEc:ibn:ijefaa:v:13:y:2021:i:1:p:124
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    2. Vincent Okoth Ongore & Gemechu Berhanu Kusa, 2013. "Determinants of Financial Performance of Commercial Banks in Kenya," International Journal of Economics and Financial Issues, Econjournals, vol. 3(1), pages 237-252.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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