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Cost Efficiency and Returns to Scale in GCC Banking

In: Banking in the GCC

Author

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  • Abderazak Bakhouche

    (Higher Colleges of Technology)

Abstract

This chapter examines DEA-based cost efficiency and returns to scale in the GCC banking sectors over the period 2002–2022 m using a two-stage methodology. The results show that cost efficiency in GCC banking averaged about 0.286, driven by technical (0.723), scale (0.784), and allocative (0.384) efficiencies. While technical and scale efficiencies are more influenced by bank-level characteristics, allocative efficiencies are affected by institutional and macroeconomic factors. Most banks operate under DRS or IRS. The study finds that cost efficiency in GCC banking varies across countries, sizes, and ownership, and is affected by major external shocks. The study calls for consolidation among GCC banks and for enhancement in institutional quality.

Suggested Citation

  • Abderazak Bakhouche, 2026. "Cost Efficiency and Returns to Scale in GCC Banking," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Banking in the GCC, chapter 8, pages 255-283, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-032-21737-0_8
    DOI: 10.1007/978-3-032-21737-0_8
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