Investigation of the efficiency of the Azerbaijan banking system with Data Envelopment Analysis (2015–2019)

Abstract

The primary objective of this research was to assess the efficiency of banks within the Azerbaijani banking system, identifying and comparing both efficient and inefficient banks. To this end, the efficiency of 25 banks operating in Azerbaijan from 2015 to 2019 was analysed using input-oriented CCR, BCC and Super Efficiency models. The results provide insights into the efficiency levels of the banks and highlight the distinctions between efficient and inefficient institutions. Furthermore, recommendations for improving inefficient banks were developed, with the expectation that these suggestions could enhance the effective use of resources within the banking system. The study estimates a significant increase in banking system efficiency over the years, and this improvement is believed to reflect the positive impact of reform and enhancement efforts.