Managerial and Scale Efficiency in the MENA Banking: A Panel Study of the Jordanian Banking Sector

74 Pages Posted: 28 Jan 2004

See all articles by Ihsan Isik

Ihsan Isik

Rowan University

Lokman Gunduz

Beykent University - Department of International Trade

Mohammed Omran

The Insurance Holding Company; Arab Academy for Science and Technology

Abstract

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

Suggested Citation

Isik, Ihsan and Gunduz, Lokman and Omran, Mohammed M., Managerial and Scale Efficiency in the MENA Banking: A Panel Study of the Jordanian Banking Sector. Available at SSRN: https://ssrn.com/abstract=494224 or http://dx.doi.org/10.2139/ssrn.494224

Ihsan Isik (Contact Author)

Rowan University ( email )

Glassboro, NJ 08028
United States
856-256-4500 Ext: 3486 (Phone)
856-256-4439 (Fax)

Lokman Gunduz

Beykent University - Department of International Trade ( email )

Buyukcekmece
Istanbul 34900
Turkey
+90-212-872 64 32 Ext. 199 (Phone)
+90-212-872 24 89 (Fax)

Mohammed M. Omran

The Insurance Holding Company ( email )

7 Talet Herb Street
Cairo
Egypt

Arab Academy for Science and Technology ( email )

P.O. Box. 1029
College of Management and Technology
Miami, Alexandria
Egypt
(203) 5482 532 (Phone)
(203) 5566 072 (Fax)

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