Comparative Study of Domestic and Foreign Bank Efficiency in Tanzania: DEA Approach

Abstract

Using data envelopment analysis (DEA), the objective of this paper is to analysis and compares the efficiency of domestic and foreign banks in Tanzania during the period of 2007 to 2016. The study is based on a panel data set of 5 domestic banks and 5 foreign banks; intermediation approach is employed to select the outputs and inputs in computing the efficiency scores. The findings of the study show that foreign banks have a higher efficiency level than domestic banks, this imply that foreign banks are relatively more managerially efficient in controlling their costs. The findings are consistent with most of the previous researches where foreign banks outperforming domestic banks in term of efficiency.

Keywords:  Bank efficiency, Data envelopment analysis (DEA), Banking sector