Empirical Analysis of Commercial Banks in Malaysia Using Data Envelopment Analysis (DEA) Model

Nordiana Osagie Davies

Empirical Analysis of Commercial Banks in Malaysia Using Data Envelopment Analysis (DEA) Model

Nordiana Osagie Davies

Abstract

The aim of this study is to evaluate the financial performance of domestic commercial banks in Malaysia over the period from 2001 to 2011.The sample consist of eight domestic commercial bank listed in the Malaysian Stock Market (Bursa Malaysia). The study uses secondary data, which were mainly taken from the annual reports of the banks extracted from the DataStream of Thomson Reuters. DEA efficiency scores were used in the bank performance analysis. The data envelopment analysis (DEA) through its intermediation approach used interest expense and non-interest expense as the input variables and advances, loans and investments as the output variables in the efficiency score analysis. DEA results shows that the overall mean scale efficiency score (92.98%) is found to be higher than that of technical efficiency score (71.33%) implying that during the period of study, domestic banks have been inefficient in controlling their costs rather than efficiently operating by optimizing the economies of scale due to their size.

Keywords

Bank SizeAsset ManagementOperational EfficiencyFinancial Ratios

References

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Empirical Analysis of Commercial Banks in Malaysia Using Data Envelopment Analysis (DEA) Model

Abstract

Keywords

References

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