Bank efficiency in Malaysia: a use of malmquist meta-frontier analysis

Azad, Md. Abul Kalam; Munisamy, Susila; Masum, Abdul Kadar Muhammad; Saona, Paolo

doi:10.1007/s40821-016-0054-4

Cited by 41 publications

(35 citation statements)

References 46 publications

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“…In this research, ‘virtual bank’ denotes the bank resulting from the M&A of two existing banks. Despite the numerous studies on bank efficiency and productivity using DEA (Wanke et al ., ; Wu et al, ; Wanke and Barros, ; Liu et al ., ; Wanke and Barros, ; Wanke et al ., ; Azad et al ., ) and other stochastic frontier approaches (Baten and Kamil, ), a systematic study of banks in African countries is still missing (Ikhide, ; Barros et al ., ; Zhao and Murinde, ; Mlambo and Ncube, ; Mwega, ; Devarajan and Kasekende, ; Ghirmay, ; Hussain et al ., ; Nkamleu, ; Poshakwale and Qian, ). Indeed, thus far, no in‐depth analysis of M&As in African banking has been conducted (Alhassan, ; Alhassan and Ohene‐Asare, ; Ohene‐Asare and Asmild, ; Kablan, ; Mlambo and Ncube, ).…”

Section: Introductionmentioning

confidence: 99%

The Development of the Mozambican Banking Sector and Strategic Fit of Mergers and Acquisitions: A Two‐Stage DEA Approach

Barros¹,

Azad²,

Constantino³

2016

African Development Review

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This paper examines the strategic fit of mergers and acquisitions (M&A) in Mozambican banks, using a two-stage data envelopment analysis (DEA) approach to compute the impact of contextual variables on efficiency scores and returns to scale of the resulting virtual merged banks. In an 'M&A DEA' model, different pairs of bidder and target companies are considered. In the first stage an M&A DEA model is used. Simplex regression is adopted in the second stage. The results reveal that ownership (public or foreign) impacts virtual efficiency levels. However, the findings also show that care must be exercised with M&A because the resultant banking organization could be oversized when foreign ownership is predominant, especially when public ownership is low. Given the relative sizes of the markets in terms of productive resources, M&A involving Mozambican banks can easily lead to decreasing returns to scale. Thus, a greater emphasis should be given to merging purely public banks with foreign ones and vice versa. Ã Research for this paper was undertaken with the support of the Calouste Gulbenkian Foundation.

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Section: Introductionmentioning

confidence: 99%

The Development of the Mozambican Banking Sector and Strategic Fit of Mergers and Acquisitions: A Two‐Stage DEA Approach

Barros¹,

Azad²,

Constantino³

2016

African Development Review

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“…This paper examines efficiency of Islamic vs conventional banks in Malaysia by unveiling the traditional efficiency concept-black box with a three-stage network structure of bank operations. The limitations of existing bank efficiency approaches in explaining banks' true performance is exhibited by Azad et al (2016). According to Azad et al (2016), bank efficiency examinations applying any of the three traditional approaches (intermediation, production and profitability) produces biased result because when a banks efficiency is examined based on its profitability, a complete ignorance of banks long-term sustainability (capital ratio) can turn a profitable bank into a bankrupt bank.…”

Section: Discussionmentioning

confidence: 99%

Unveiling black-box of bank efficiency

Azad

Kwek

Talib

2017

IMEFM

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Purpose This paper aims to examine the efficiency of Islamic vs conventional banks in Malaysia by unveiling the traditional efficiency concept – black box – with a three-stage network structure of bank operations. Design/methodology/approach This paper applies data envelopment analysis (DEA) for examining bank efficiency. An adaptive three-step network DEA (NDEA) model is demonstrated for redefining the traditional black box of banking operations. Slack-based variable returns to scale approach is used. Data from all 43 commercial banks in Malaysia are examined over a six-year study period (2010-2015). Inputs and outputs of the model are selected based on CAMELS rating. Undesired output is also considered in time of examining bank efficiency in Malaysia. Findings The empirical results of this study signify that only a few banks in Malaysia have been performing well in converting deposits and equities into profit as well as minimizing loan loss provisions. Islamic banks in Malaysia have performed better both in production (converting deposits and equities into earning assets) and profitability (converting loans into net income). Conventional banks, however, have over scored in intermediation (converting earning assets into loans). Originality/value An adaptive NDEA approach proposed in this paper defines the core banking process instead of traditional approaches in examining bank efficiency based on individual functions (nodes in the network model). This approach has proven to provide better benchmark capacity.

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“…They have determined that market concentration, bank size and gross domestic product growth have positive influence on X-efficiency, while competition and liquidity risk have a negative influence on X-efficiency. Azad et al (2017) have used two-stage data envelopment analysis to investigate bank efficiency in Malaysia. Their findings show that bank nature, bank ownership and gross domestic product have noteworthy effect on bank efficiency.…”

Section: Literature Review and Methodologymentioning

confidence: 99%

Efficiency Estimation of Commercial Banks Based on Financial Performance: Input Oriented DEA CRS/VRS Models

2018

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Measurement and evaluation of the bank’s operations efficiency requires analytical techniques that provide data beyond those available from the standard analysis of financial statements. The Data Envelopment Analysis (DEA) is a mathematical programming technique that offers valuable insights in finding inefficient banks taking into account the scope of the services and resources used to provide these banking services. The results of the DEA analysis can provide significant information to the bank’s management that can supplement the information obtained using traditional techniques for assessing efficiency. The assessment of banks’ efficiency in the Republic of Serbia is of particular importance due to intense competition and implemented banking reforms. Therefore, in this paper DEA analysis will be applied for the examination and assessment of the efficiency of the operations of Serbian banks during the period 2014-2016. The analysis will show which of the banks operates efficiently, where the efficiency of the banks is not at a satisfactory level, as well as the potential reasons for inefficiency.

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Bank efficiency in Malaysia: a use of malmquist meta-frontier analysis

Cited by 41 publications

References 46 publications

The Development of the Mozambican Banking Sector and Strategic Fit of Mergers and Acquisitions: A Two‐Stage DEA Approach

The Development of the Mozambican Banking Sector and Strategic Fit of Mergers and Acquisitions: A Two‐Stage DEA Approach

Unveiling black-box of bank efficiency

Efficiency Estimation of Commercial Banks Based on Financial Performance: Input Oriented DEA CRS/VRS Models

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