I= EFFICIENCY ANALYSIS OF COMMERCIAL BANKS IN PAKISTAN
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Title of Thesis
EFFICIENCY ANALYSIS OF COMMERCIAL BANKS IN PAKISTAN

Author(s)
TANVIR AHMAD
Institute/University/Department Details
Department of Development Economics/ University Of Agriculture, Faisalabad
Session
2008
Subject
Development Economics
Number of Pages
177
Keywords (Extracted from title, table of contents and abstract of thesis)
Efficiency; Data Envelopment Analysis; Commercial Banks;

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.

Download Full Thesis
6669.97 KB
S. No. Chapter Title of the Chapters Page Size (KB)
1 0 Contents
161.84 KB
2 1 Introduction 1
78.33 KB
  1.1 Efficiency 2
  1.2 Objectives of the Study 3
  1.3 Hypothesis 5
  1.4 Organization of the Thesis 5
3 2 Review of Literature 6
250.1 KB
4 3 Methodology 22
637.46 KB
  3.1 Data Envelopment Analysis 28
  3.2 Proposed Specifications 38
  3.3 Data and Source 49
5 4 Results and Discussion 50
4942.97 KB
  4.1 Specification-I: Technical Efficiency 50
  4.2 Specification-II: Cost Efficiency 70
  4.3 Specification-III: Income Efficiency 88
  4.4 Specification-IV: Profit Efficiency (Output Side) 105
  4.5 Specification-V: Profit Efficiency (Input Side) 123
6 5 Summary and Suggestions 141
81.85 KB
  5.1 Limitations of the Study 144
  5.2 Areas for Future Research 145
7 6 References 146
739.13 KB
  6.1 Appendix 159