Cost Efficiency of the Egyptian Banking Sector: A Panel Data Analysis

Hassan Ismail Hassan and Ammar Jreisat
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Hassan Ismail 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.

International Journal of Economics and Financial Issues, 2016, vol. 6, issue 3, 861-871

Abstract: Based on a two stage method this paper investigates the determinants of the cost efficiency (CE) of Egyptian banking sector. Employing data envelopment analysis (DEA). We compare the CE of large, medium and small banks and the CE of foreign and domestic banks using a balanced panel which cover 14 banks operating in Egypt from 1997 to 2013. In the first stage, CE scores are computed using an input-oriented DEA. At the second stage, CE scores are regressed on a set of potential explanatory variables in a logit model. While the CE scores show large improvements in the early and third phases of financial deregulation. Over the entire sample period, CE has declined at the rate of 0.963% per annum. Our finding indicates that age, loan to net interest margin, return on equity and good management practices positively affects banks CE and number of bank branches negatively affects bank CE.

Keywords: Cost Efficiency; Two-stage Data Envelopment Analysis; Egyptian Banks (search for similar items in EconPapers)
JEL-codes: D22 D24 D61 G21 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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