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Does Bank Efficiency Matter? A Case of Egypt

Author

Listed:
  • Hassan Hassan

    (Department of Banking and Finance, College of Business Administrative, Al Ain University of Science and Technology, UAE)

  • Ammar Jreisat

    (Department of Banking and Finance, College of Business Administrative, Al Ain University of Science and Technology, UAE)

Abstract

This paper offers to measure the efficiency of the Egyptian banks and its determining factors. Using data envelopment analysis in the first stage to find the efficiency level for banks, by comparing the efficiency of large, medium and small banks and the efficiency of foreign and domestic banks through a balanced panel which cover 14 banks operating in Egypt from 1997 to 2013. A detailed analysis per banking group reveals that medium banks are the most efficient ones, followed by foreign banks. In the second stage, potential determinants of technical efficiency are studied using a regression model using method developed by Papke and Wooldridge (1996). The variables logarithm of total assets, loans to deposits, and Net interest margin are all statistically significant with positive affected on the efficiency level for the Egyptian banks, however, number of branches and non-interest expense over total assets all statistically significant with negatively affected on the efficiency level for the Egyptian banks

Suggested Citation

  • Hassan Hassan & Ammar Jreisat, 2016. "Does Bank Efficiency Matter? A Case of Egypt," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 473-478.
    • Handle: RePEc:eco:journ1:2016-02-15
    as

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    References listed on IDEAS

    as
    1. Malak Reda, 2013. "The Effect of Mergers and Acquisitions on Bank Efficiency: Evidence from Bank Consolidation in Egypt," Working Papers 770, Economic Research Forum, revised Sep 2013.
    2. Timothy J. Coelli & D.S. Prasada Rao & Christopher J. O’Donnell & George E. Battese, 2005. "An Introduction to Efficiency and Productivity Analysis," Springer Books, Springer, edition 0, number 978-0-387-25895-9, April.
    3. repec:bla:scandj:v:94:y:1992:i:0:p:s111-29 is not listed on IDEAS
    4. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-632, Nov.-Dec..
    5. Ha Vu & Sean Turnell, 2011. "Cost and Profit Efficiencies of Australian Banks and the Impact of the Global Financial Crisis," The Economic Record, The Economic Society of Australia, vol. 87(279), pages 525-536, December.
    6. Ahmed Mohamed Badreldin & Christian Kalhoefer, 2009. "The Effect of Mergers and Acquisitions on Bank Performance in Egypt," Working Papers 18, The German University in Cairo, Faculty of Management Technology.
    7. R J Colwell & E P Davis, 1992. "Output, Productivity and Externalities - the Case of Banking," Bank of England working papers 3, Bank of England.
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    Cited by:

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    2. 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.

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    More about this item

    Keywords

    Egyptian Banks; Technical Efficiency; Pure Technical Efficiency; Scale Efficiency; Data Envelopment Analysis;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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