Title: Measuring efficiency of the banking industry before and after the recent financial crisis: some international evidence
Authors: Devashis Mitra; Mohammad Siddiquee
Faculty of Business Administration, University of New Brunswick, Fredericton, NB E3B 5A3, Canada
Faculty of Business, University of New Brunswick, Saint John, NB E2L 4L5, Canada
Abstract: The recent financial crisis has plagued banking institutions around the world. Using a non-parametric (data envelopment analysis) approach, we measure operating and profit efficiency of 21 commercial banks from four countries during 2004-2010. The results suggest that for the most part there is no statistically significant difference in the efficiency scores before and after the crisis. We found that both sets of efficiency scores are high which limits the scope for any further efficiency improvements of the sampled banks either in terms of operations or profitability. An examination of financial ratio reveals that all the sampled banks increased their capital adequacy and loan loss provisions in the post-crisis period.
Keywords: efficiency measurement; data envelopment analysis; DEA; financial crisis; banking industry; operating efficiency; profit efficiency; commercial banks; Canada; Australia; Bangladesh; USA; United States; capital adequacy; loan loss provisions.
Int. J. of Accounting and Finance, 2013 Vol.4, No.2, pp.143 - 167
Submission date: 17 Dec 2012
Date of acceptance: 11 May 2013
Available online: 07 Nov 2013