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A comparison on efficiency of domestic and foreign banks in Malaysia: a DEA approach

This study utilizes non parametric Data Envelopment Analysis (DEA) to analyze and compare the efficiency of foreign and domestic banks in Malaysia. The analysis is based on a panel data set of 9 domestic banks and 12 foreign banks in Malaysia over the period of 2002 - 2009. Intermediation approach...

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Main Authors: Ong, Tze San, Lim, Yee Theng, Teh, Boon Heng
Format: Article
Published: Society of Business and Management Dynamics 2011
Online Access:http://psasir.upm.edu.my/id/eprint/22755/
http://bmdynamics.com/publication_abstract.php?c_id=33&id=4
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spelling my.upm.eprints.227552016-02-19T02:29:13Z http://psasir.upm.edu.my/id/eprint/22755/ A comparison on efficiency of domestic and foreign banks in Malaysia: a DEA approach Ong, Tze San Lim, Yee Theng Teh, Boon Heng This study utilizes non parametric Data Envelopment Analysis (DEA) to analyze and compare the efficiency of foreign and domestic banks in Malaysia. The analysis is based on a panel data set of 9 domestic banks and 12 foreign banks in Malaysia over the period of 2002 - 2009. Intermediation approach is used to define the inputs and outputs in computerizing the efficiency scores. Surprisingly, the findings are inconsistent with most of the findings of previous studies where the foreign banks were outperforming their domestic peers in term of efficiency. Conversely, the finding of this study shows that domestic banks have a higher efficiency level than foreign banks, this imply that domestic banks are relatively more managerially efficient in controlling their costs. The second stage of the empirical results is based on the Tobit model, which suggests that the pure technical efficiency (PTE) of banks in Malaysia is mainly affect by capital strength, loan quality, expenses and asset size. Society of Business and Management Dynamics 2011-10 Article NonPeerReviewed Ong, Tze San and Lim, Yee Theng and Teh, Boon Heng (2011) A comparison on efficiency of domestic and foreign banks in Malaysia: a DEA approach. Business Management Dynamics, 1 (4). pp. 33-49. ISSN 2047-7031 http://bmdynamics.com/publication_abstract.php?c_id=33&id=4
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
description This study utilizes non parametric Data Envelopment Analysis (DEA) to analyze and compare the efficiency of foreign and domestic banks in Malaysia. The analysis is based on a panel data set of 9 domestic banks and 12 foreign banks in Malaysia over the period of 2002 - 2009. Intermediation approach is used to define the inputs and outputs in computerizing the efficiency scores. Surprisingly, the findings are inconsistent with most of the findings of previous studies where the foreign banks were outperforming their domestic peers in term of efficiency. Conversely, the finding of this study shows that domestic banks have a higher efficiency level than foreign banks, this imply that domestic banks are relatively more managerially efficient in controlling their costs. The second stage of the empirical results is based on the Tobit model, which suggests that the pure technical efficiency (PTE) of banks in Malaysia is mainly affect by capital strength, loan quality, expenses and asset size.
format Article
author Ong, Tze San
Lim, Yee Theng
Teh, Boon Heng
spellingShingle Ong, Tze San
Lim, Yee Theng
Teh, Boon Heng
A comparison on efficiency of domestic and foreign banks in Malaysia: a DEA approach
author_facet Ong, Tze San
Lim, Yee Theng
Teh, Boon Heng
author_sort Ong, Tze San
title A comparison on efficiency of domestic and foreign banks in Malaysia: a DEA approach
title_short A comparison on efficiency of domestic and foreign banks in Malaysia: a DEA approach
title_full A comparison on efficiency of domestic and foreign banks in Malaysia: a DEA approach
title_fullStr A comparison on efficiency of domestic and foreign banks in Malaysia: a DEA approach
title_full_unstemmed A comparison on efficiency of domestic and foreign banks in Malaysia: a DEA approach
title_sort comparison on efficiency of domestic and foreign banks in malaysia: a dea approach
publisher Society of Business and Management Dynamics
publishDate 2011
url http://psasir.upm.edu.my/id/eprint/22755/
http://bmdynamics.com/publication_abstract.php?c_id=33&id=4
_version_ 1643827888576790528
score 13.211869

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