Abstract
Banks are designed to be efficient as they play a vital role in the economic development; otherwise, banks may create obstacles in the development process of any country. This chapter employs an appropriate stochastic frontier model to investigate the performance of banks, traded in Kuala Lumpur Stock Exchange (KLSE) market. Based on the likelihood ratio test, the Cobb-Douglas stochastic frontier model is found to be more preferable than Translog stochastic frontier model for this study. The market data are used as the input and output variables. Banks traded in KLSE exhibited a commendable overall efficiency level of 99.52% during 2005-2009 hence suggesting minimal input waste of 0.48%. Among the banks, the Rashid Hussain bank is found to be highly efficient with a score of 0.9973 and BIMB (BIMB Holdings) bank is noted to have the lowest efficiency with a score of 0.9917. The results also show that the technical efficiency effect is increased over time.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
