Cost Inefficiency in the Pakistan Banking Sector 2002-2009

Kent Matthews

SBP Research Bulletin, 2014, vol. 10, 1-20

Abstract: This paper uses the Simar-Wilson bootstrap technology to estimate cost inefficiency in the Pakistan banking sector for the period 2002-2009. Several models of outputs including bad output are considered alongside a common set of inputs. Cost inefficiency is decomposed into its Technical and Allocative inefficiency components. Panel regression methods are used to model the drivers of inefficiency. In general the findings suggest that inefficiency is declining over time and that there is strong conditional convergence to peer group clusters based on branch levels, ownership and specialism. It is found that in general banks with more branches have higher cost inefficiency, the one foreign bank operates on lower cost inefficiency and Islamic banks have higher allocative inefficiency which is offset by a lower technical inefficiency.

Keywords: Cost inefficiency; Pakistan banking. DEA. Bootstrapping (search for similar items in EconPapers)
JEL-codes: D23 G21 G28 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:sbp:journl:63

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