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Operational Efficiency and TFP Change of Major Cambodian Financial Institutions:A Data Envelopment Analysis during the 2006-2011 Period

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  • Okuda, Hidenobu
  • Poleng, Chea
  • Aiba, Daiju

Abstract

This study examines the technical efficiency and productivity of 18 major domestic and foreign financial institutions in Cambodia during the period of 2006 to 2011. Data envelopment analysis was employed to estimate the efficiency of business operations and the Malmquist productivity index was used to identify the reasons for their productivity changes. Empirical results reveal that during the research period, the efficiency scores were high, while they were higher in large institutions than in small ones. When measured using a value-added approach that focused on the fund mobilization capability of financial institutions, the efficiency of domestic institutions was found to be better than that of their foreign counterparts; when measured using an operational approach that focused on the income earning capacity of institutions, there was no significant difference in technical efficiency between domestic and foreign institutions. It was also observed that Cambodian financial institutions suffered a slight drop in total factor productivity during the research period. These observations suggest that further improvement of Cambodian financial institutions’ technical efficiency requires an increase in the operational capacity of individual institutions and the introduction of advanced banking technologies and skills.

Suggested Citation

  • Okuda, Hidenobu & Poleng, Chea & Aiba, Daiju, 2014. "Operational Efficiency and TFP Change of Major Cambodian Financial Institutions:A Data Envelopment Analysis during the 2006-2011 Period," Discussion Papers 2014-02, Graduate School of Economics, Hitotsubashi University.
  • Handle: RePEc:hit:econdp:2014-02
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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/26081/5/070econDP14-02.pdf
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    Keywords

    Cambodia; DEA; Commercial Banks; Specialized Banks; Microfinance Institutions;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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