Measuring the X-Efficiency of Saudi Banks: Case Study Pre and Post-Coronavirus Crisis

Abstract

By specifying a translog cost function and applying the DFA (Data Frontier Approach) model, the objective of this paper was to determine the x-efficiency, economies of scale and economies of scope for Saudi banks during the period 2017-2022. Subsequently, the model compares bank efficiency before and after corona pandemic. The empirical results indicate that the measure of x-inefficiency (around 7% to 19% of costs) dominates scale inefficiency (around 5% of costs), moreover, there is no difference in efficiency before and after the coronavirus pandemic.