Abstract
This paper employs Data Envelopment Analysis (DEA) and bootstrap simulation to investigate the influence of some key financial ratios on technical efficiency performance of banks operating in Gulf Cooperation Council (GCC) countries. Our results indicate that the fall in technical efficiency of GCC banks in the year of international financial crisis (2008) was due to simultaneous fall in pure technical efficiency and the scale efficiency. The output loss caused by scale inefficiency (fall of scale operations below optimum level) in 2008 estimated 16 percent on average compared to 5 percent in 2007. Our findings indicate that scale efficiency is inversely related to banks' size, implying a major source of scale inefficiency in GCC banks is due to sub-optimal size of operations.
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