Efficiency Measurement of Banks using Data Envelopment analysis

Banks in any financial system, plays a pivot role in economic development. A sound banking system exhibits the strength of the country's economy also. The performance of banks largely depends on many micro and macro-level factors and it becomes important to examine the efficiency of bank in order to get information about the magnitude of their strength. A bank with greater efficiency no doubt is doing well to deliver output against the related inputs consumed but at the same time, it is also important to gauge banks that are not at par on the efficiency front in order to be declared as sound bank. Such banks input and output ratios indicate the lower efficiency, which is not good for the bank and economy as well. To measure efficiency this study deploy “Data envelopment Analysis (DEA)” and the efficiency of public and private sector banks were examined.