Cost and Profit Efficiency and Management Behaviour of Commercial Banks (Evidence from Tanzania)

Said Seif Mzee and Masoud Rashid Mohamed

Asian Economic and Financial Review, 2014, vol. 4, issue 10, 1447-1460

Abstract: Using non-parametric technique (the Data Envelopment Analysis - DEA) for data from 1998 to 2011, we investigate the cost and profit efficiency and management behaviour of 25 Tanzanian commercial banks. We examine the influence of ownership, bank profile, size, and corporate structure on bank efficiency. The overall results show that commercial banks in Tanzania are relatively more profit efficiency than cost efficiency. Domestic banks appear to be more cost efficient while foreign banks appear to be more profit efficient. Big banks found to be more cost and profit efficient compared with small banks, and listed banks appear to be more cost efficient than unlisted banks. On management behaviour, commercial banks are found to neither support “bad management’’ nor “bad luck’’ hypothesis.

Keywords: Tanzania commercial banks; Cost efficiency; Profit efficiency; Bad luck; Bad management; DEA. (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:asi:aeafrj:v:4:y:2014:i:10:p:1447-1460:id:1271

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