X-efficiency Analysis of Commercial Banks in Pakistan: A Preliminary Investigation

Mohammad Hanif Akhtar
Additional contact information
Mohammad Hanif Akhtar: International Business at the Department of Commerce, B.Z. University, Multan.

The Pakistan Development Review, 2002, vol. 41, issue 4, 567-580

Abstract: The emergence of a fast-paced dynamic environment in the business world in general, and in the financial services sector in particular, has highlighted the significance of competition and efficiency. The need for deregulation has become a touchstone of success in fostering both competition and efficiency especially in the economies, which are exposed to structural reforms. In addition to that, intense competition both among domestic and foreign banks, rapid speed of innovations and introduction of new financial instruments, changing consumer’s demands and desire for product augmentation have changed the way a bank conducts business and services its customers. Larger the degree of competition, it is perceived that the firms would become more efficient. However, when the structure of an industry is product of the government regulations, the degree of competition is impaired markedly implying that the efficiency suffers negatively. Banking industry acts as life-blood of modern trade and commerce acting as a bridge to provide a major source of financial intermediation. Thus, appraisal of its efficiency is vital in context of an efficient and competitive financial system. Study of x-efficiency is believed to be important in particular as Berger, et al. (1993) found that x-inefficiencies account for around 20 percent or more of banking costs. Similarly, recent drive among banks towards downsizing, rightsizing and rationalisation of banking costs also implicates for the assessment of x-efficiency analysis of banks. It becomes vital in Pakistani context as there appears to be no study in literature on efficiency or x-efficiency analysis of banks in Pakistan. “A great deal more work is needed on x-efficiency research in banking. Managerial efficiency, the concept of x-efficiency, appears to be a much more important strategic and policy consideration” [Molyneux, et al. (1960), p. 273]. Given

Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.pide.org.pk/pdf/PDR/2002/Volume4/567-580.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pid:journl:v:41:y:2002:i:4:p:567-580

Access Statistics for this article

More articles in The Pakistan Development Review from Pakistan Institute of Development Economics Contact information at EDIRC.
Bibliographic data for series maintained by Khurram Iqbal ().