Khartoum University Journal of
Management Studies

OFFICIAL PUBLICATION OF THE SCHOOL OF MANAGEMENT STUDIES, UNIVERSITY OF KHARTOUM
  • Abbreviation: Khartoum Univ. J. Manage. Stud.
  • Language: English
  • ISSN: 1585-8069
  • DOI: 10.5897/KUJMS
  • Start Year: 1994
  • Published Articles: 35

Technical efficiency analysis of banks in major oil exporting Middle East countries

Ibrahim A.Onour
  • Ibrahim A.Onour
  • School of Management Studies, University of Khartoum, Sudan.
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Abdelgadir M. A Abdalla
  • Abdelgadir M. A Abdalla
  • School of Management Studies, University of Khartoum, Sudan.
  • Google Scholar


  •  Received: 01 May 2012
  •  Accepted: 01 June 2012
  •  Published: 30 June 2012

Abstract

This paper investigates the efficiency performance of thirty six banks operating in Gulf Cooperation Council (GCC) countries during the period 2006-2008[1]. Our results indicate, in general, GCC banks showed a considerable pure technical efficiency in the past three years with the year 2007 exhibits the most efficient year, as the number of pure technical efficient banks reached 33 percent of the total banks compared to 25 percent in 2008.  The fall in technical efficiency in 2008 is due to simultaneous fall in pure technical efficiency and the scale efficiency. The output loss caused by scale inefficiency (fall of scale operations below optimum level) in 2008 is estimated 16 percent compared to 5 percent in 2007.  Our results also indicate that the scale efficiency is inversely related to banks' size implying a major source of scale inefficiency in GCC banks is due to sub-optimal size of operations. It is also indicated in the paper that scale efficiency is inversely related to risk, implying effective risk management policies may also enhance scale efficiency.

 

Keywords: Efficiency; DEA; Banking

 

1The six GC countries include Saudi Arabia, UAE, Kuwait, Qatar, Sultanate of Oman and Bahrain