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Performance of Financial Institutions in Bhutan

  • Dil Bahadur Rahut


    (Assistant Professor, South Asian University, New Delhi, India)

  • Ivan Velasquez Castellanos


    (Bolivia Country Programme Coordinator, Konrad Adenauer Stiftung (KAS))

  • Pravakar Sahoo


    (Associate Professor, Institute of Economic Growth, New Delhi, India)

Bhutan is a small landlocked country in South Asia, located in the eastern Himalayas, and bordered by India and China. With a population of about 687,000, the country has a small economy that is also fragile. Nevertheless, its banking system plays an essential role in the growth and development of the country. This paper analyses the financial performance, the development and growth of bank and non-bank financial institutions of Bhutan for the period 1999-2008 using both traditional and data envelopment analysis (DEA). The DEA analysis shows that the country’s financial institutions are efficient, with the Bhutan National Bank being the most efficient. Overall, the paper finds that the return on equity (ROE) of the financial institutions in Bhutan are comparable to that of international banks and the development of the financial sector in Bhutan has contributed to the growth of the Bhutanese economy.

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Article provided by United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in its journal Asia-Pacific Development Journal.

Volume (Year): 19 (2012)
Issue (Month): 1 (June)
Pages: 97-138

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Handle: RePEc:unt:jnapdj:v:19:y:2012:i:1:p:97-138
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