Comparison on Efficiency of Foreign and Domestic Banks Evidence from Algeria

Ishaq Hacini and Khadra Dahou ()
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Khadra Dahou: Department of Management, University of Mascara, Algeria

Journal of Banking and Financial Economics, 2018, vol. 2, issue 10, 106-119

Abstract: The study investigates the differences in technical, pure technical, and scale efficiencies of domestic and foreign banks in Algeria over the period of 2000–2012. The study uses annual data of 10 foreign banks and 05 domestic banks operated in Algeria. The input-oriented Data Envelopment Analysis model is used to measure the banks’ efficiency score. In addition, a set of parametric and non-parametric tests are used for investigating the differences in efficiency between foreign and domestic banks. The findings reveal that the banks in Algeria could improve their technical efficiency by 23%. In addition, it seems that banks in Algeria suffer from the scale inefficiency. On the other hand, the foreign banks are more technically efficient than domestic banks. The superiority of foreign banks in technical efficiency is due to their superiority in the scale efficiency.

Keywords: Algeria; Data Envelopment Analysis; Efficiency; Domestic banks; Foreign banks (search for similar items in EconPapers)
JEL-codes: C14 G21 G28 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:sgm:jbfeuw:v:2:y:2018:i:10:p:106-119

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