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Efficiency Analysis of the Banking Sector in Pakistan: An Application of the Malmquist Index Approach

In: Handbook on Data Envelopment Analysis in Business, Finance, and Sustainability Recent Trends and Developments

Author

Listed:
  • Farah Naz
  • Alishba Naseer
  • Tooba Lutfullah

Abstract

The purpose of this chapter is to analyze the efficiency of the banking sector in Pakistan in order to provide sufficient evidence for the improvement of the banks. This chapter determines the efficiency levels of 25 sample Pakistani banks over the period of 2010–2021 in order to investigate the factors which affect the effectiveness of the banks. Data envelopment analysis (DEA) and the Malmquist index approach have been used to determine the efficiency of the banking sector, and an overall regression analysis provides the results of the model. This determines the factors affecting the efficiency levels of the bank and how significant an impact they have on the banking sector. Empirical results have shown that internal and external determinants have a significant impact on the efficiency levels of the banks. However, some variables did not have a significant impact on the total efficiency of the banks due to specific factors. This research contributes to the most important scope of efficiency in the banking sector in Pakistan following the financial crisis. Moreover, the research will help in analyzing the factors that affect the efficiency levels of the banks, particularly in Pakistan.

Suggested Citation

  • Farah Naz & Alishba Naseer & Tooba Lutfullah, 2024. "Efficiency Analysis of the Banking Sector in Pakistan: An Application of the Malmquist Index Approach," World Scientific Book Chapters, in: Sabri Boubaker & Thanh Ngo (ed.), Handbook on Data Envelopment Analysis in Business, Finance, and Sustainability Recent Trends and Developments, chapter 12, pages 377-399, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9781800615786_0012
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    More about this item

    Keywords

    Data Envelopment Analysis; Business; Finance; Banking; Accounting; Sustainability; Efficiency; Performance; Productivity; Total Factor Productivity; Frontier Analysis;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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