University of Khartoum

Sudanese Banks Efficiency Using Data Envelopment Analysis DEA

Sudanese Banks Efficiency Using Data Envelopment Analysis DEA

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Title: Sudanese Banks Efficiency Using Data Envelopment Analysis DEA
Author: Eltom, Alnema Bakri Khorsahein
Abstract: This study aims to determine the efficiency of commercial banks operating in Sudan through the evaluation of the Scale Efficiency and Pure Technical. Data used is collected during the years 2008 through 2013 and analysis is carried using Data Envelopment Analysis (DEA). The objectives of this study is stated as follows (1) Measure Technical Efficiency and Scale Efficiency for the Sudanese banks using DEA model (2) Determine the proper improvements needed by inefficient banks in Sudan to reach the technical efficiency score (3) Study the impact of changing polices that have been adopted by the Sudan central bank which may have affected banks inputs and outputs (4) Identify the kind reforms and environment that may help to advance efficiency in banking sector. Source of data for this research is mainly the Sudan Central Bank files and reports, and the audited financial statements and annual reports for banks under study. The study sample included 25 banks of the working banks in Sudan for the year 2008, 30 banks for the years 2009 through 2011, 31 banks for the year 2012, and 36 banks for year 2013. Results showed that some banks reached efficiency level among years; theses banks allocated resources to the optimal level of operation, i.e. the size of bank capital matches its operation level in addition to proper implementation of production plans in managing resources. Other banks fell short in attaining efficiency level which indicates may have used more inputs than they actually needed (input waste). Another reason for inefficiency is insufficient inputs to reach efficiency level; underutilization of resourses. This study reports and interprets some efficiency determinants and result of statistical analysis; Return on Assets (ROA) and Ration of Loan Over Total Assets (LOANTA) have positive effect on Efficiency while Bank Size effect fluctuate between years. The study also represents efficiency test results in terms of Sudanese banking structure; State-owned, Jointly-owned, and Foreign Banks. It was revealed that in the years followed the secession foreign banks and jointly-owned banks appeared more efficient than state-owned banks. The study recommends Sudanese banks consider efficiency analysis as important factor in their profitability, risk analysis, and management performance. They ought to adopt new evaluation methods in order to get new insights on their efficiencies, strengths, and weaknesses. Furthermore, Sudan Central Bank should establish a larger database with information pertinent to banks performance, debits, assets, and so forth. Sudan Central Bank should also take into consideration the potential scale improvements needed to reach Efficiency level for individual banks; by increasing or decreasing input, in order to assume a better advisory and regulatory role. My work also provides many recommendations to Sudanese businesses and suggestions for future research. Banks management is strongly recommended to consider the benefits that result from improved efficiency by better managing inputs and outputs. Finally, inefficient banks should closely monitor efficiency scores in order to achieve more meaningful business insights.
URI: http://khartoumspace.uofk.edu/123456789/25552


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