Technical efficiency, Data development analysis, Banking system, Deposit money banks


This paper examines the technical efficiency of deposit money banks (DMBS') in Nigeria. Measures of technical efficiency are derived in the Nigerian deposit money banks (DMBS') by implementing non-parametric, data envelopment analysis technique on a cross section of 24 banks taken from 2007 to 2013. The efficiency concepts, measurement and methodology were discussed. The existence of technical efficiency is established. The result suggests that the sources of overall technical inefficiency, the observed issues are due to poor input utilization (managerial inefficiency) and failure to operate almost productive scale size. Therefore, in this research the paper suggests or considers some important factors which may exert on influence on the overall technical efficiency of a bank. This includes larger profit levels, market share, and exposure to off-balance sheet activities may hove positive result on the overall technical efficiency. On the other hand, poor assets quality (i.e., larger volume of Non-performing Asset in relation to total assets) has negative consequences on the overall technical efficiency of the bank. Examination of these factors would help placed banks' efficiency better.

Author Bio

The author is a staff of Research Department, Central Bank of Nigeria.

Publication Title

CBN Bullion


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