Performance of Private Commercial banks in Pakistan: A Data envelopment Analysis Approach

Abstract

The study applied Data envelopment Analysis (DEA) technique to measure the performance of commercial banks in Pakistan for the period 2006 to 2010.DEA is a non parametric approach and takes into account multiple inputs and outputs to measure efficiency of business called Decision making Units. The study used input oriented CCR model by using intermediation approach, mostly used approach in Banking sector by taking Interest and Non Interest expenses as inputs while Interest and Non Interest Income as outputs. The results indicated that Muslim Commercial Bank (MCB) was the efficient bank throughout study and Samba bank the most inefficient one. The study also found that average efficiency of the private commercial banks declined during the study period.

Keywords: Data Envelopment analysis, commercial banks, Decision Making Units, efficiency.