Technical Efficiency of Malaysia’s Development Financial Institutions: Application of Two-Stage DEA Analysis

Yadav, Raj; Katib, Mohamed Nasser

doi:10.5539/ass.v11n16p175

Cited by 7 publications

(9 citation statements)

References 25 publications

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“…A large number of empirical researches use the OLS (Yadav -Katib 2015) or Tobit regression in the second stage (e.g. Garza-García 2012).…”

Section: Methodology and Datamentioning

confidence: 99%

Cost Efficiency Measurement Using Two-Stage Data Envelopment Analysis in the Czech and Slovak Banking Sectors*

Palečková¹

2019

Acta Oeconomica

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The aim of the paper is to estimate cost efficiency and its determinants of the Czech and Slovak commercial banks within the period of 2005–2015. In this paper two-stage Data Envelopment Analysis (DEA) is used. In the first stage, I estimate the relative cost efficiency applying the input-oriented model with variable return to scale and find that the Czech banks were more cost efficient than the Slovak banks. The main reason of cost inefficiency is the excess of clients' deposits in the banks' balance sheet. In the second stage, I use the panel data analysis and estimate the determinants of cost efficiency in the two countries. I choose 8 bank-specific and macroeconomic factors that influence cost efficiency. The results show that the larger banks with higher liquidity risk and with a lower value of the net interest margin were more efficient. It confirms the reason of inefficiency determined from the DEA model. Banks were highly cost efficient during the economic expansion with a lower value of the inflation rate.

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“…A large number of empirical researches use the OLS (Yadav -Katib 2015) or Tobit regression in the second stage (e.g. Garza-García 2012).…”

Section: Methodology and Datamentioning

confidence: 99%

Cost Efficiency Measurement Using Two-Stage Data Envelopment Analysis in the Czech and Slovak Banking Sectors*

Palečková¹

2019

Acta Oeconomica

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“…There also have specific institutions were established in their own country based on their developmental needs. In Malaysia, Yadav and Katib [10] studied the level of efficiency and determinants of nine DFIs operating in Malaysia from 2006 to 2012. BPMB and SCC are the most efficient among DFIs.…”

Section: Dea Analysis In Dfismentioning

confidence: 99%

“…The difference between technical efficiency and pure technical efficiency is that it refers to a situation where a firm has a scale of inefficiency over a period of time [38]. Scale efficiency is the ability of one firm compared to other firms to achieve economies of scale by operating the best scale in operations [10].…”

Section: Dea Modelmentioning

confidence: 99%

“…Hence, this study looked at the current level of efficiency for each DFIs by employing Data Envelopment Analysis (DEA) which is a non-parametric analysis from 2009 to 2018. DEA was chosen because of its flexibility, applicability for multi-input and multi-output variables, and widespread use in various studies, particularly in developing countries such as Malaysia [6][7][8][9][10][11]. Furthermore, the works in DEA have shown strong growth in terms of journal article publication, with a total of 10,300 articles published as of the end of 2016 [12].…”

Section: Introductionmentioning

confidence: 99%

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Technical Efficiency of Development Financial Institutions in Malaysia

Hashim¹,

Basri²,

Hussin³

2021

ujaf

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This study aims to identify the technical efficiency of Development Financial Institutions (DFIs) in Malaysia with the selected inputs of fixed asset and labour. Meanwhile, the output used in the study is financing. DFI is an institution that plays an important role in socio-economic development under the supervision of Bank Negara Malaysia (BNM). Using annual data from 2009 to 2018, technical efficiency is analysed using Data Envelopment Analysis (DEA) on the ten institutions selected in the DFIs. DEA results show that Sabah Development Bank Berhad (SDB) is the only institution considered as the most efficient. The rest of DFIs in the sample were deemed technical inefficient. The results also indicate that inefficient institutions including those with the lowest performance which are Credit Guarantee Corporation (CGC), Bank Pertanian Malaysia Berhad (Agrobank) and Bank Simpanan Nasional (BSN) have inefficient management in resource utilisation. Thus, activities in the operation of DFIs need to follow the law of return to scale for input and output orientation so that resources can be managed efficiently.

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“…Coelli, et al, (2005) argues that CRS efficiency scores are decomposed into two components; Scale efficiency and VRS TE ("pure" technical efficiency). The efficiency measure corresponding to VRS assumption represents pure technical efficiency (PTE) which measures inefficiencies due to only managerial underperformance whereas scale efficiency indicates whether the DMU (DTS) produces at the most efficient size (Lothgren & Tambour, 1999;Yadav & Katib, 2015).…”

Section: Intermediation Efficiencymentioning

confidence: 99%

Selected Firm Characteristics and Financial Intermediation Efficiency of Deposit Taking Saving and Credit Co-Operative Societies in Kenya

2018

JASETD

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There has been growing concerns over the financial soundness of SACCOs with a few having collapsed in the recent past. Empirical evidence indicates that there exists a strong association between efficiency and stability of financial institutions and that an efficient banking sector is better able to withstand negative shocks in case of financial crises. The study first sought to evaluate the financial intermediation efficiency of deposit taking SACCOs (DTSs) and subsequently determine the relationship between selected firm characteristics and financial intermediation efficiency. Specifically, the relationship between asset quality, income diversification, profitability & size and financial intermediation efficiency was assessed. A balanced panel data for 103 DTSs over the period 2011-2014 was collected and analyzed using a two staged methodology. In the first stage, efficiency scores were generated using data envelopment analysis (DEA). DEA Computer Program Version 2.1 was used to generate the efficiency scores. In the second stage, firm characteristics were regressed on the efficiency scores using fixed effects panel regression model. The bias corrected efficiency score were used instead of conventional DEA scores and incorporated into EViews version 8 for regression analysis. Fixed effect model with robust standard errors was used for analysis. The study revealed that asset quality had a direct relationship with intermediation efficiency. This implies that as the asset quality improves, efficiency of a DTS increases. Diversification was found to be hurting efficiency. More profitable DTSs were found to be more efficient indicating that profitability is efficiency enhancing. The results also revealed a positive relationship between size and efficiency. The study recommends that managers and policy makers should concentrate on how to improve the managerial efficiency and also increase the size of SACCOs. Policy framework should also be directed towards encouraging DTSs to consolidate their operations and limit their diversification into noninterest income.

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Technical Efficiency of Malaysia’s Development Financial Institutions: Application of Two-Stage DEA Analysis

Cited by 7 publications

References 25 publications

Cost Efficiency Measurement Using Two-Stage Data Envelopment Analysis in the Czech and Slovak Banking Sectors*

Cost Efficiency Measurement Using Two-Stage Data Envelopment Analysis in the Czech and Slovak Banking Sectors*

Technical Efficiency of Development Financial Institutions in Malaysia

Selected Firm Characteristics and Financial Intermediation Efficiency of Deposit Taking Saving and Credit Co-Operative Societies in Kenya

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