Abstract

Performance improvement and managerial ability estimation using benchmarking tools and data envelopment analysis (DEA) in banking and financial sectors have attracted considerable attention among researchers and bank managers. Although there are many efforts in two-stage DEA in banks, few studies have been conducted to measure managerial ability and technical efficiency of two-stage DEA in the banking sector. This contribution proposes a two-stage DEA procedure to estimate technical efficiency and managerial ability in the banking sector in six Asian countries. The empirical results obtained for selected Asian banks revealed that variables total capital adequacy ratio, total assets and number of branches have a positive impact on the efficiency of the deposit gathering section. Moreover, we observed that the number of ATMs has a negative impact on the efficiency of the sales and services section. Another finding is that in all these six countries, the sales and service section has performed better than the deposit gathering section.

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