Technical efficiency in Botswana’s financial institutions: a DEA approach
This paper examines technical and pure technical efficiencies of ten major financial institutions in Botswana for each year during the period 2001-2006 using data envelopment analysis. In order to obtain more robust and reliable results, the sensitivity of our efficiency indices were put into test by choosing three alternative approaches in specifying the mix of inputs and outputs. The empirical results indicate that: (a) no matter which approach and year are taken into consideration, Baroda and FNB (which are both foreign banks) and BSB (which is a publicly owned institution) are consistently among the most efficient institutions and BDC, ABC and NDB are the least efficient ones; (b) the most efficient banks are either small or large institutions in terms of their asset sizes; (c) due to the small sample size, the evidence of a relationship between the age of institutions and their technical efficiencies remains inconclusive. One can conclude that financial institutions can further enhance efficiency by adopting self-service technologies such as telephone and internet banking which can substantially reduce their service delivery costs.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +612 4221-3659
Fax: +612 4221-3725
Web page: http://business.uow.edu.au/econ/index.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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 212-34, May.
- David C. Wheelock & Paul W. Wilson, 1996. "Technical progress, inefficiency and productivity change in U.S. banking, 1984-1993," Working Papers 1994-021, Federal Reserve Bank of St. Louis.
- Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
- Ali Ataullah & Hang Le, 2006. "Economic reforms and bank efficiency in developing countries: the case of the Indian banking industry," Applied Financial Economics, Taylor & Francis Journals, vol. 16(9), pages 653-663.
- 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.
- Isik, Ihsan & Kabir Hassan, M., 2003. "Financial deregulation and total factor productivity change: An empirical study of Turkish commercial banks," Journal of Banking & Finance, Elsevier, vol. 27(8), pages 1455-1485, August.
- Peek, Joe & Rosengren, Eric S. & Kasirye, Faith, 1999.
"The poor performance of foreign bank subsidiaries: Were the problems acquired or created?,"
Journal of Banking & Finance,
Elsevier, vol. 23(2-4), pages 579-604, February.
- Joe Peek & Eric S. Rosengren & Faith Kasirye, 1998. "The poor performance of foreign bank subsidiaries: were the problems acquired or created?," Working Papers 98-3, Federal Reserve Bank of Boston.
- Ferrier, Gary D. & Lovell, C. A. Knox, 1990. "Measuring cost efficiency in banking : Econometric and linear programming evidence," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 229-245.
- Chen, Xiaogang & Skully, Michael & Brown, Kym, 2005. "Banking efficiency in China: Application of DEA to pre- and post-deregulation eras: 1993-2000," China Economic Review, Elsevier, vol. 16(3), pages 229-245.
- Hao, Jonathan & Hunter, William Curt & Yang, Won Keun, 2001. "Deregulation and efficiency: the case of private Korean banks," Journal of Economics and Business, Elsevier, vol. 53(2-3), pages 237-254.
- C. Edward Chang & Iftekhar Hasan & William Hunter, 1998. "Efficiency of multinational banks: an empirical investigation," Applied Financial Economics, Taylor & Francis Journals, vol. 8(6), pages 689-696.
- Berger, Allen N. & DeYoung, Robert, 1997.
"Problem loans and cost efficiency in commercial banks,"
Journal of Banking & Finance,
Elsevier, vol. 21(6), pages 849-870, June.
- Allen N. Berger & Robert DeYoung, 1997. "Problem loans and cost efficiency in commercial banks," Finance and Economics Discussion Series 1997-8, Board of Governors of the Federal Reserve System (U.S.).
- Allen N. Berger & Robert DeYoung, 1995. "Problem Loans and Cost Efficiency in Commercial Banks," Center for Financial Institutions Working Papers 96-01, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Julia Paxton, 2007. "Technical Efficiency in a Semi-Formal Financial Sector: The Case of Mexico," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(1), pages 57-74, 02.
- Andrew C. Worthington†, 1998. "Technical Efficiency and Technological Change in Australian Building Societies, 1993/94-1996/97‡," Banking & Finance Conference Papers 9906, Centre for Australian Financial Institutions.
- Sathye, Milind, 2003. "Efficiency of banks in a developing economy: The case of India," European Journal of Operational Research, Elsevier, vol. 148(3), pages 662-671, August.
- Rangan, Nanda & Grabowski, Richard & Aly, Hassan Y. & Pasurka, Carl, 1988. "The technical efficiency of US banks," Economics Letters, Elsevier, vol. 28(2), pages 169-175.
- Canhoto, Ana & Dermine, Jean, 2003. "A note on banking efficiency in Portugal, New vs. Old banks," Journal of Banking & Finance, Elsevier, vol. 27(11), pages 2087-2098, November.
- Das, Abhiman & Ghosh, Saibal, 2006. "Financial deregulation and efficiency: An empirical analysis of Indian banks during the post reform period," Review of Financial Economics, Elsevier, vol. 15(3), pages 193-221.
When requesting a correction, please mention this item's handle: RePEc:uow:depec1:wp08-14. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Siminski)
If references are entirely missing, you can add them using this form.