Title: The evolution of Malaysian banking sector's efficiency during financial duress: consequences, concerns, and policy implications

Authors: Fadzlan Sufian

Addresses: Khazanah Research and Investment Strategy, Khazanah Nasional Berhad, Level 35, Tower 2, Petronas Twin Towers, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia; Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia, Malaysia

Abstract: By employing the non-stochastic data envelopment analysis (DEA) method, the present paper provides empirical evidence on the efficiency of the Malaysian banking sector around the Asian financial crisis. The empirical findings suggest that the foreign banks (FB) have exhibited higher technical efficiency (TE) compared to their domestic bank counterparts. However, the results suggest that the FB were severely affected by the Asian financial crisis, implying that the FB were not insulated from unexpected events like the Asian financial crisis of 1997.

Keywords: bank efficiency; data envelopment analysis; DEA; panel regression analysis; Malaysia; Malaysian banking sector; Asian financial crisis; technical efficiency; foreign banks; domestic banks.

DOI: 10.1504/IJADS.2010.036852

International Journal of Applied Decision Sciences, 2010 Vol.3 No.4, pp.366 - 389

Available online: 12 Nov 2010 *

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