Post Financial Deregulations Era and Efficiency of Pakistan Banking Sector

Ali, Rafaqet; Afzal, Muhammad
December 2011
Interdisciplinary Journal of Contemporary Research in Business;Dec2011, Vol. 3 Issue 8, p1177
Academic Journal
This study examines technical, pure technical and scale efficiency of Pakistani banks during post financial reforms period by using data from 2004 to 2009. Non parametric Data Envelopment Analysis is applied for this purpose. The results suggest that technical efficiency decreases during middle period but increases in recent years. Small banks are found more efficient as compare to medium and large banks. Decomposition analysis explains dominance of scale inefficiency over pure technical efficiency for technical efficiency of banks. This study further explores potential determinants of calculated efficiencies. Diversification of income, market share in respect of deposits and issuance of loans are positively associated whereas bad cost management of banks and current depressing economic situation of this country exerts negative impact on banking efficiency.


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