Journal of Applied Finance & Banking

Technical Efficiency of Banks and the Effects of Risk Factors on the Bank Efficiency in Gulf Cooperation Council Countries

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• Abstract

  This paper uses production frontier model to generate and analyse the technical efficiency scores for the banks in Gulf Cooperation Council Countries. A sample of 52 banks is selected for the study. Three stages of analysis are adopted. At the first stage, the technical efficiency is analysed between countries to derive variations of between banks from one country to another. It’s found that Kuwaiti and Emirati banks are regionally best performers. At the second stage of the analysis, banks are analysed within country. The within-country analysis shows that Saudi banks are the best performers and they face intense within-country competition, as their technical efficiency gaps from the country's best performer to others are lowest compared to that of other countries. At the final stage of the analysis, the papers investigates possible determinants of bank technical efficiency, and it finds that unsystematic risks of the banks and the monetary policy uncertainty do influence the level of bank technical efficiency.