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Do Private Commercial Banks Outperform State-owned Commercial Banks? Empirical Evidence from Bangladesh

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  • Md Golzare Nabi
  • Md. Aminul Islam
  • Rosni Bakar

Abstract

The paper seeks to measure and compare the performance of state-owned commercial banks, conventional private commercial banks and Islamic commercial banks operating in Bangladesh during 2009-2014 using the Data Envelopment Analysis (DEA). It uses a sample of 19 commercial banks comprising four state-owned banks, ten conventional private commercial banks and five Islamic commercial banks. The paper shows that the average technical efficiency scores of state-owned banks, conventional private banks and Islamic banks are 0.8592, 0.9419 and 0.9569 respectively. This means that state-owned banks experience highest inefficiency of 14.08% followed by conventional private commercial banks (5.81%) and Islamic banks (4.42%). It is also found that state-owned banks and Islamic banks face technical inefficiency due mainly to scale inefficiency while technical inefficiency of conventional private commercial banks is attributed mainly to pure technical inefficiency. The efficiency results suggest that state-owned commercial banks and Islamic banks need to improve their technical by enhancing scale efficiency. Conventional private banks may improve their technical efficiency by upgrading managerial performance.JEL Classifications Numbers: C14, C61, G21Keywords: Efficiency, Data Envelopment Analysis, Commercial Banks, Bangladesh.

Suggested Citation

  • Md Golzare Nabi & Md. Aminul Islam & Rosni Bakar, 2019. "Do Private Commercial Banks Outperform State-owned Commercial Banks? Empirical Evidence from Bangladesh," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 9(5), pages 1-9.
    • Handle: RePEc:spt:apfiba:v:9:y:2019:i:5:f:9_5_9
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    References listed on IDEAS

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    Cited by:

    1. Md Reiazul Haque & Md Nurul Islam Sohel, 2019. "Are Islamic Banks Less Efficient than other Banks? Evidence from Bangladesh," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(10), pages 1136-1146, October.

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    More about this item

    Keywords

    efficiency; data envelopment analysis; commercial banks; bangladesh.;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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