A Comparative Intermediary and Operational Efficiency Study of Private and Government Banking System in Iran Applying Data Envelopment Analysis (DEA)

Abstract

This study evaluated efficiency of private and government banks using Data Envelopment Analysis with Assumption of a constant and variable return to scale. The statistical study included nine government and six private banks taken from the period of 2006-2010. Total expenditures and deposits as inputs and total credit facilities and revenues as outputs were chosen because of both operational and intermediary approach were used in this study. The results implied the condition of inputs and outputs of the governments was not optimized with compared the private banks and also, the same of the commercial banks was not optimized with compared the specialized banks and their effectiveness could be increased. Also the BCC output centered model was more meaningful than CCR modelused to express the efficiency score of government and private banks that respectively were 93.82%, 94.52% and thus the weighted average of efficiency for whole banks would be 94.1%

Keywords: Efficiency, decision making units, constant returns to scale, variable returns to scale, output- oriented, input- oriented.

JEL Classification: G21, G24, G19, C61, E44, M41