Measuring Bank Efficiency and Its Determinants in Developing Countries Using Data Envelopment Analysis: The Case of Libya 2004-2010

Abstract

This paper offers to measure the technical efficiency and its determinants factors of Libyan Banks from 2004 to 2010. For this objective we use Data Envelopment Analysis for assessing technical efficiency in the first stage, and in the second stage we use the Tobit regression model to identify potential determinants of efficiency by using E-Views 7 software. The results showed that the specialized banks have exhibited higher mean technical efficiency relative to commercial and private banks. The results of efficiency determinants showed positive relationship between bank efficiency, and ROA; size of operation; capital adequacy; and government linked banks (government ownership). This paper concludes with some policy implications of the results.

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