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An Empirical Analysis of Allocative Efficiency of Nigerian CommercialBanks: A DEA Approach

Author

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  • Usman Owolabi Akeem

    (Department of Management and Accounting, Ladoke Akintola University of Technology, Ogbomoso, Nigeria)

  • Fadipe Moses

    (Department of Management and Accounting, Ladoke Akintola University of Technology, Ogbomoso, Nigeria.)

Abstract

This paper investigated an empirical analysis of allocative efficiency of Nigerian commercial Banks between the years 2002 to 2011. Ten Nigerian Banks were randomly selected out of 15 banks operating in Nigeria. For this intention, the Data Envelopment Analysis (DEA) model was used with three input variables (deposits, operating expenses, and assets) and four output variables (loan and advances, investment, Interest income, and non-interest income) The mean allocativeefficiency, for the period examined stood at 0.896 (89.6%). This mean result the fact that Nigerian banking sector generally needs managerial attention beyond the emphasis on continualbanking reforms of recapitalization, merger and acquisition and the likes so as to be ranked with the global perspective

Suggested Citation

  • Usman Owolabi Akeem & Fadipe Moses, 2014. "An Empirical Analysis of Allocative Efficiency of Nigerian CommercialBanks: A DEA Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 4(3), pages 465-475.
    • Handle: RePEc:eco:journ1:2014-03-3
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    References listed on IDEAS

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    1. Sufian, F., 2004. "The Eficiency Effects of Bank Mergers and Acquisitions in a Developing Economy: Evidence from Malaysia," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 1(4), pages 53-74.
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    7. Aly, Hassan Y, et al, 1990. "Technical, Scale, and Allocative Efficiencies in U.S. Banking: An Empirical Investigation," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 211-218, May.
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    Cited by:

    1. Facundo Costa de Arguibel & Carolina Wittig & Juan Antonio Dip, 2023. "Estructura de Propiedad, Origen de Capital y Eficiencia Bancaria: Evidencia para A," Working Papers 251, Red Nacional de Investigadores en Economía (RedNIE).
    2. Yung‐ho Chiu & Tai‐Yu Lin & Tzu‐Han Chang & Yi‐Nuo Lin & Shih‐Yung Chiu, 2021. "Prevaluating efficiency gains from potential mergers and acquisitions in the financial industry with the Resample Past–Present–Future data envelopment analysis approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(2), pages 369-384, March.
    3. Ying Li & Yung-ho Chiu & Tai-Yu Lin & Yun Yuan Huang, 2019. "Market share and performance in Taiwanese banks: min/max SBM DEA," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 27(2), pages 233-252, July.
    4. Ayobami Ojeyinka, Titus & Enisan Akinlo, Anthony, 2021. "Does Bank Size Affect Efficiency? Evidence From Commercial Banks In Nigeria," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 8(1), pages 79-100, June.

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    More about this item

    Keywords

    Data Envelopment Analysis; Allocative efficiency; Decision-Making Units; Financial Intermediation;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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