PREDICTING THE EFFICIENCY OF COMMERCIAL BANKS IN BANGLADESH

  • Md. Golam Solaiman Bangladesh Army International University of Science and Technology, Bangladesh
  • Md. Shahnur Azad Chowdhury Int'l Islamic University Chittagong, Bangladesh
  • Basharat Hossain Int'l Islamic University Chittagong, Bangladesh
  • Sultana Akter Int'l Islamic University Chittagong, Bangladesh
  • Md. Kazi Golam Azam Int'l Islamic University Chittagong, Bangladesh https://orcid.org/0000-0002-3712-1282
Keywords: DEA, Efficiency, Technical Efficiency, Productivity Growth, Domestic & Foreign Commercial Banks.

Abstract

This paper examines the efficiency of the thirty-six commercial banks (27 Domestic and 9 Foreign Banks) by reviewing Literature and analyzing 6 years (2011-2016) data. The sample was selected based on the availability of data.  It is assumed that the banking sector complies with the variable returns to scale (VRS) approach which means the output of a bank is not proportionately related to its inputs. Therefore, VRS in the ‘Data Envelop Analysis (DEA)’ technique has been employed in this paper. The findings reveal that most (30 banks out of 36 banks) of the banks of Bangladesh are inefficient in terms of technical, allocative, and scale efficiency during the 2011-2016 periods. Conversely, only six banks (4 domestic banks and 2 foreign banks) were found efficient in overall scores in this scrutinization. This study did not find any single bank as efficient in all categories (allocative efficiency, technical efficiency, pure efficiency ratio) for the whole study period (2011-2016). This paper provides valuable intuition, analysis, and comments to the managers and policymakers of the bank’s efficiency score so that they comprehend their position. Finally, this paper suggests necessary steps to transform the inefficient banks into efficient banks, and to make stable the banking sector of Bangladesh.

JEL Classification Codes: E51, G21, M1.

 

Author Biographies

Md. Golam Solaiman, Bangladesh Army International University of Science and Technology, Bangladesh

Research Fellow & In-Charge (Inventory, Purchase & Procurement), Registrar Office (Admin Branch), Bangladesh Army International University of Science and Technology, Bangladesh

Md. Shahnur Azad Chowdhury, Int'l Islamic University Chittagong, Bangladesh

Associate Professor, Department of Business Administration, Int'l Islamic University Chittagong, Bangladesh

Basharat Hossain, Int'l Islamic University Chittagong, Bangladesh

Assistant Professor, Department of Business Administration, Int'l Islamic University Chittagong, Bangladesh

Sultana Akter, Int'l Islamic University Chittagong, Bangladesh

Assistant Professor, Department of Business Administration, Int'l Islamic University Chittagong, Bangladesh

Md. Kazi Golam Azam, Int'l Islamic University Chittagong, Bangladesh

Assistant Professor, Department of Business Administration, Int'l Islamic University Chittagong, Bangladesh

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Published
2021-06-07
How to Cite
Solaiman, M. G., Chowdhury, M. S. A., Hossain, B., Akter, S., & Azam, M. K. G. (2021). PREDICTING THE EFFICIENCY OF COMMERCIAL BANKS IN BANGLADESH. International Journal of Accounting & Finance Review, 7(1), 17-30. https://doi.org/10.46281/ijafr.v7i1.1168
Section
Research Paper/Theoretical Paper/Review Paper/Short Communication Paper