AN ASSESSMENT OF RELATIVE EFFICIENCY OF BANKS IN SRI LANKA

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Abstract

This paper examines how the financial reforms introduced throughout last 30 year period have improved the managerial efficiency of firms in the banking industry in Sri Lanka. Using non-parametric data envelopment analysis (DEA), this study estimated relative efficiency of banking firms in Sri Lanka using a sample of data collected from 20 year cross section (1989-2008). The study found that the banks in Sri Lanka have recorded relatively higher level of efficiency. Both managerial decisions and scale of operation have been equally contributed to the recorded inefficiency. We found that large banks were relatively more efficient than small banks. However, medium size banks were recorded relatively lower levels of efficiency which were mainly contributed by the managerial factor.

Keywords: Data Envelopment Analysis, Efficiency, Commercial Banking, Sri Lanka

How to cite this paper: Seelanatha, L., & Silva, H. E. (2012). An assessment of relative efficiency of banks in Sri Lanka. Corporate Ownership & Control, 9(3-3), 357-372. https://doi.org/10.22495/cocv9i3c3art3