European Journal of Accounting, Auditing and Finance Research (EJAAFR)

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An Evaluation of Technical Efficiency Of Commercial Banks In Nigeria (A Dea Approach)


This study evaluated technical efficiency of the Nigerian commercial Bank between the years 2002 to 2011. Ten Nigerian Banks were randomly selected out of 15 banks quoted in Nigeria. Published financial statements of the banks were sourced from which data for our variables were ascertained for 10 years. For this intention, the Data Envelopment Analysis (DEA) model was used with three input variables, which are; (deposits, operating expenses, and assets.) and four output variable; which are (loan and advances, investment, Interest income, and non-interest income). This study adopted the intermediation approach in selecting the inputs and outputs above.

The results of the analysis showed that, some banks were found perfectly technical efficient with efficiency scores of 1.000 meaning (100%) efficiency, whereas those that were below 1.000 were less fully efficient. The mean technical efficiency, for the period examined stood at 0.938 (93.8%). This mean result meant that the Nigerian banking sector generally needs sound managerial attention. It is recommended therefore that the sound macroeconomic, sectorial and structural policies are applied to improve internal balance, ensure external sector performance and stimulate the productivity base and industrial sector of the Nigerian economy


Keywords: Data Envelopment Analysis, Decision-Making Units, Financial Intermediation, Technical Efficiency

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