EFFICIENCY ANALYSIS OF COMMERCIAL BANKS IN PAKISTAN

TANVIR, AHMAD (2008) EFFICIENCY ANALYSIS OF COMMERCIAL BANKS IN PAKISTAN. Doctoral thesis, University Of Agriculture, Faisalabad.

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Abstract

Pakistan is a developing country and its financial sector consists of different types of institutions. Commercial banks are major part of Pakistan’s financial sector. In the economic development of a country commercial banks play an important role. The outstanding macroeconomic performance of Pakistan in the last five years portrayed Pakistan as an example of successful economy. As in Pakistan, no comprehensive study has been carried out for the measurement of commercial banks efficiency to show banking sector performance under changed scenarios, so this study is conducted to determine the efficiency of commercial banks, Data Envelopment Analysis (DEA) is used due to its ability to capture multiple outputs and no danger regarding the misspecification of the frontier. Input oriented approach of DEA under Constant Returns to Scale (CRS) and Variable Return to scale (VRS) is used for the efficiency measurement of the commercial banks. In this study , scale efficiency and Returns to Scale under which commercial banks operate id also estimated . Intermediation approach is used to define the inputs and outputs of the commercial banks. Five specifications of DEA are developed for efficiency measurement by using panel data of commercial banks for the period from 2001 to 2004. For each year, efficiency frontier is estimated under each specification to measure the relative performance of commercial banks. After the estimation of efficiency form non-parametric DEA, tobit model is used to develop the relationship between efficiency scores and factors efficiency it under each specification. After analysis it is found that commercial banks could ipprove their efficiency by increasing profits, assets, markup interest earnings and non-markup interest earning and decreasing liabilities, markup interest expenditures and non-markup interest expenditures among the bank specific variables. At the same time, government can improve the efficiency of banking sector in Pakistan by promoting foreign banking and discouraging the privatization of public sector bands and mergers in the banking sector.

Item Type: Thesis (Doctoral)
Uncontrolled Keywords: Efficiency; Data Envelopment Analysis; Commercial Banks;
Subjects: H Social Sciences > HB Economic Theory
Depositing User: Muhammad Khan Khan
Date Deposited: 20 Sep 2016 07:06
Last Modified: 20 Sep 2016 07:06
URI: http://eprints.hec.gov.pk/id/eprint/1402

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