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Evaluation of Online Bank Efficiency in Bangladesh: A Data Envelopment Analysis (DEA) Approach

Abstract

This study aims to examine the relative efficiency of Bangladesh online banks during 2001 – 2007 by utilizing Data Envelopment Analysis (DEA). Based on the several online sampled banks, the findings reveal that the most efficient banks were AL-Arafah Islami Bank Limited, Shahajalal Islami Bank Limited, Eastern Bank Limited, and the less efficient banks over the study period were Janata Bank Limited, Uttara Bank Limited, United Commercial Bank Limited, Pubali Bank Limited, and AB Bank Limited. Among the three groups Group-1 (n=20), Group-2 (n=18), Group-3 (n=15) we observed that the individual efficiency level of banks are increasing group by group. The efficiency level of Group-2 was slightly increased from the efficiency level of Group-1. The source of efficiency of the sampled banks was found to be lower for technical efficiency and scale efficiency rather than pure technical efficiency. Moreover, the scale inefficiency was found lower in G-3 compare to G-1 and G-2. This indicated that the scale inefficiency was observed decreasing group by group and these were attributable to technical efficiency rather than pure technical inefficiency.

Mohammad Romel Bhuia, Azizul Baten, Anaton Abdulbasah Kamil,Nandini Deb

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