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Measuring Bank Performance of Nepali Banks: A Data Envelopment Analysis (DEA) Perspective

Author

Listed:
  • Karan S. Thagunna

    (Kathmandu University, School of Management (KUSOM), Nepal.)

  • Shashank Poudel

    (Kathmandu University, School of Management (KUSOM), Nepal.)

Abstract

The aim of this study is to develop a performance model for measuring relative efficiency and potential improvement capabilities of Nepali banks by scrutinizing intermediation aspects. For measuring the efficiency and performance, this paper uses a relatively new frontier approach known as Data Envelopment Analysis (DEA). The paper uses two basic DEA models to fulfill its objectives. This paper seeks to measure and analyze the efficiency levels of banks in Nepal during 2007-08 to 2010-11. The study reveals that efficiency level is relatively stable and has increased on overall. Additionally, it also breaks down the overall efficiency of banks into technical and scale efficiency. This study found no significant relationship with efficiency level and ownership structure of banks and there were no notable differences in the efficiency levels of banks according to their asset size.

Suggested Citation

  • Karan S. Thagunna & Shashank Poudel, 2013. "Measuring Bank Performance of Nepali Banks: A Data Envelopment Analysis (DEA) Perspective," International Journal of Economics and Financial Issues, Econjournals, vol. 3(1), pages 54-65.
    • Handle: RePEc:eco:journ1:2013-01-6
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    References listed on IDEAS

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    Cited by:

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    2. Kang, Hee Jay & Kim, Changhee & Choi, Kanghwa, 2024. "Combining bootstrap data envelopment analysis with social networks for rank discrimination and suitable potential benchmarks," European Journal of Operational Research, Elsevier, vol. 312(1), pages 283-297.
    3. Ahmed A.Elhakeem & Khairy Elgiziry, 2016. "The Impact of Acquisitions Deals Announcement According to Financing Decisions on Value of Listed Acquiring Companies at Egyptian Stock Exchange," Accounting and Finance Research, Sciedu Press, vol. 5(4), pages 115-115, November.
    4. Nirmal Singh, 2021. "Bank Stability and its Determinants in the Nepalese Banking Industry," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 33(1-2), pages 14-44, October.
    5. Fontin, Jean-Raymond & Lin, Shi-Woei, 2019. "Comparison of banking innovation in low-income countries: A meta-frontier approach," Journal of Business Research, Elsevier, vol. 97(C), pages 198-207.
    6. Nidhi Agarwala & Sudarshan Maity & Tarak Nath Sahu, 2024. "Efficiency of Indian banks in fostering financial inclusion: an emerging economy perspective," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 29(2), pages 341-353, June.
    7. Serpil Kilic Depren & Ozer Depren, 2016. "Measuring Efficiency and Total Factor Productivity using Data Envelopment Analysis: An Empirical Study from Banks of Turkey," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 711-717.
    8. Kishor Hakuduwal, Ph.D., 2018. "Technical Efficiency of Nepalese Banking Sector," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 30(2), pages 1-35, October.
    9. Hari Prasad Pathak, PhD, 2019. "Malmquist Productivity Index Approach in Assessing Performance of Commercial Banks: Evidence from Nepal," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 31(2), pages 1-25, October.
    10. Li Jia & Wang Ping & Tao Xiangyang & Wen Yao, 2021. "Productivity Analysis for Banks’ Merger and Acquisition Using Two-Stage DEA: Evidence from China," Journal of Systems Science and Information, De Gruyter, vol. 9(6), pages 627-659, December.

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    More about this item

    Keywords

    Nepal; Data Envelopment Analysis; Bank Performance; Efficiency; Technical Efficiency; Scale Efficiency;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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