Efficiency and Productivity Change of Selected Online Banks in Bangladesh: A Non-parametric Malmquist Approach

Md. Azizul Baten (), Kasim Mm and Rahman M
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Md. Azizul Baten: Department of Decision Science, School of Quantitative Sciences, Universiti Utara Malaysia, Malaysia
Kasim Mm: Department of Decision Science, School of Quantitative Sciences, Universiti Utara Malaysia, Malaysia
Rahman M: Department of Statistics, Shahjalal University of Science and Technology, Bangladesh

Journal of Internet Banking and Commerce, 2015, vol. 20, issue 03, 01-16

Abstract: This study evaluated the technical efficiency change and productivity change of national commercial banks (NCBs) and private banks (PBs) by employing cost data envelopment analysis (DEA), profit DEA and Malmquist based DEA. The cost inefficiency and profit efficiency are observed slightly higher for PBs than NCBs. The average technical and allocative efficiency are found 75.4% and 35.9% respectively by cost DEA; while 74.0% and 31.8% for profit DEA. By profit DEA, on an average bank-wise and year-wise productivity change, efficiency change and technical efficiency change are found higher than cost DEA. The average cost and average profit efficiency is observed 28.7% and 24.2% respectively. Bank-wise average productivity change and technical efficiency change are decreased at 4.2% and 5.1% respectively whereas the efficiency change is increased at 0.9% in profit DEA. The bank-wise productivity change and technical efficiency change and efficiency change are recorded decreased at 8.4%, 6.2% and 1.8% respectively in cost DEA. It is expected that there exist a huge gap among NCBs in terms of cost efficiency, so NCBs should decrease cost after performing adequate inquiries so that these cost could be recovered.

Keywords: Efficiency; Cost data envelopment analysis; Profit data envelopment analysis; Malmquist DEA; National commercial banks; Private banks; Bangladesh (search for similar items in EconPapers)
JEL-codes: A11 (search for similar items in EconPapers)
Date: 2015
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