Efficiency Analysis of the Banking Sector in Pakistan: An Application of the Malmquist Index Approach

Farah Naz, Alishba Naseer and Tooba Lutfullah

Chapter 12 in Handbook on Data Envelopment Analysis in Business, Finance, and Sustainability:Recent Trends and Developments, 2024, pp 377-399 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The purpose of this chapter is to analyze the efficiency of the banking sector in Pakistan in order to provide sufficient evidence for the improvement of the banks. This chapter determines the efficiency levels of 25 sample Pakistani banks over the period of 2010–2021 in order to investigate the factors which affect the effectiveness of the banks. Data envelopment analysis (DEA) and the Malmquist index approach have been used to determine the efficiency of the banking sector, and an overall regression analysis provides the results of the model. This determines the factors affecting the efficiency levels of the bank and how significant an impact they have on the banking sector. Empirical results have shown that internal and external determinants have a significant impact on the efficiency levels of the banks. However, some variables did not have a significant impact on the total efficiency of the banks due to specific factors. This research contributes to the most important scope of efficiency in the banking sector in Pakistan following the financial crisis. Moreover, the research will help in analyzing the factors that affect the efficiency levels of the banks, particularly in Pakistan.

Keywords: Data Envelopment Analysis; Business; Finance; Banking; Accounting; Sustainability; Efficiency; Performance; Productivity; Total Factor Productivity; Frontier Analysis (search for similar items in EconPapers)
JEL-codes: C44 C5 (search for similar items in EconPapers)
Date: 2024
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