Title: Assessing the efficiency of Malaysian banks: a data envelopment analysis approach

Authors: Abdelghani Echchabi; Oladokun Nafiu Olaniyi; Abdullah Mohammed Ayedh

Addresses: College of Business, Effat University, P.O. Box 34689, Jeddah 21478, Saudi Arabia ' Faculty of Economics and Management Sciences, International Islamic University Malaysia, Jalan Gombak, Kuala Lumpur, 53100, Malaysia ' Faculty of Economics and Muamalat, Islamic Science University of Malaysia, Bandar BaruNilai, 71800 Nilai, Negeri Sembilan, Malaysia

Abstract: The purposes of this study are two-fold: firstly, to evaluate the efficiency of the Malaysian banks and secondly to examine the factors that influence the efficiency levels of those banks. Accordingly, 23 Malaysian banks covering the period between 2006 and 2010 are considered in this study. The findings of the DEA approach indicate that in general the Malaysian banks are efficient over the studied period. Furthermore, exchange rate, GDP, and inflation rate are found to be significant determinants of Malaysian banks' efficiency. As such, the present study contributes to the existing literatures on banks efficiency. The finding might be useful to the regulators as well as the practitioners.

Keywords: bank efficiency; banking industry; DEA; Malaysia; envelopment analysis; exchange rate; GDP; gross domestic product; inflation rate.

DOI: 10.1504/AAJFA.2015.067827

Afro-Asian Journal of Finance and Accounting, 2015 Vol.5 No.1, pp.56 - 69

Received: 09 Apr 2014
Accepted: 22 Oct 2014

Published online: 18 Mar 2015 *

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