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Efficiency Of The Algerian Banks In The Post Liberalization Period

Author

Listed:
  • HACINI, Ishaq

    (Faculty of Economics and Management, University of Mascara, Algeria)

  • DAHOU, Khadra

    (Faculty of Economics and Management, University of Tlemcen, Algeria)

Abstract

This study investigates the efficiency of the banks in Algeria during the period of 2000-2012. For this end, the efficiency of fifteen banks is estimated using Data Envelopment Analysis model. Furthermore, the technical efficiency is decomposed to determine the pure technical and scale efficiencies of the Algerian banks. Based on the intermediation approach it is assumed that bank uses two inputs; total deposits and interest expenses, and produces three outputs; total loans, interest income and non-interest income. The findings indicated that on average, the technical efficiency of the Algerian banks has improved during the period of study. The Algerian banks have achieved a high pure technical efficiency with an average equals 95%, while the scale efficiency is the main source of the banks technical inefficiency. In addition, the majority of the banks tend to operate at constant return to scale or decreasing return to scale.

Suggested Citation

  • HACINI, Ishaq & DAHOU, Khadra, 2016. "Efficiency Of The Algerian Banks In The Post Liberalization Period," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 20(1), pages 90-106.
  • Handle: RePEc:vls:finstu:v:20:y:2016:i:1:p:90-106
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    References listed on IDEAS

    as
    1. Olson, Dennis & Zoubi, Taisier A., 2011. "Efficiency and bank profitability in MENA countries," Emerging Markets Review, Elsevier, vol. 12(2), pages 94-110, June.
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    3. Wheelock, David C & Wilson, Paul W, 1999. "Technical Progress, Inefficiency, and Productivity Change in U.S. Banking, 1984-1993," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 31(2), pages 212-234, May.
    4. Isik, Ihsan & Hassan, M. Kabir, 2002. "Technical, scale and allocative efficiencies of Turkish banking industry," Journal of Banking & Finance, Elsevier, vol. 26(4), pages 719-766, April.
    5. McAllister, Patrick H. & McManus, Douglas, 1993. "Resolving the scale efficiency puzzle in banking," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 389-405, April.
    6. Abid A. Burki & G.S.K. Niazi, 2006. "Impact of Financial Reforms on Efficiency of State-owned, Private and Foreign Banks in Pakistan," Finance Working Papers 22248, East Asian Bureau of Economic Research.
    7. Sealey, Calvin W, Jr & Lindley, James T, 1977. "Inputs, Outputs, and a Theory of Production and Cost at Depository Financial Institutions," Journal of Finance, American Finance Association, vol. 32(4), pages 1251-1266, September.
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    More about this item

    Keywords

    Efficiency; Data Envelopment Analysis; Algerian Banking System;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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