Managerial and Scale Efficiency in the MENA Banking: A Panel Study of the Jordanian Banking Sector
74 Pages Posted: 28 Jan 2004
Using a non-parametric methodology, this paper analyzes managerial and scale efficiencies in the Jordanian banking sector over the period 1996-2001. The results indicate that the typical Jordanian bank could obtain significant (input and cost) savings should they catch up with the best practice banks (as much as 40%). Most of the managerial inefficiency is due to scale inefficiency (output related) rather than pure technical inefficiency (input related). We also find that most of the banks in Jordan experience increasing returns to scale in their operations. Apparently, significant economies of scale are available, could the Jordanian banks expand their operations by either internal or external growth.
Keywords: Bank, efficiency, MENA region, Jordan, DEA
JEL Classification: D61, G21, G34
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