The sources of productivity change in Sudanese banks: An application of Malmquist productivity index

Due to the catalytic role that the banking sector could play in the economy, This paper employs productivity changes to investigate efficiency performance of Sudanese banks, using data from annual reports of five banks (three are commercial banks and two specialized banks (agricultural banks) during the period 2001-2016.The main objective of the paper is to examine how changes which occurred in the financial services sector during the 15-year period affected the productivity of the Banking industry in Sudan. To analyse the panel data the researcher used Data Envelopment methods. The most important results Concern to scale economy were indicating that banks operating under increasing returns to scale represent about 80% of the study sample, while those operating under constant returns to scale represent only about 20% of the sample. These results suggest that the banking industry in Sudan is dominated by relatively small sized banks. The study recommended increasing the capital of Sudanese banks because they are still small so that expansion is the first priority to make the banks reach economies of scale in the shortest possible time. The Central Bank of Sudan may encourage Sudanese banks to increase their paid-in capital and meet their capital requirements, as well as merging small banks with each other leading to an increase in capital. relative efficiency of Sudanese banks.