Research Article Open Access

Banking Efficiency in Lebanon: An Empirical Investigation

Mouataz Zreika1 and Nasser Elkanj1
  • 1 ,
Journal of Social Sciences
Volume 7 No. 2, 2011, 199-208

DOI: https://doi.org/10.3844/jssp.2011.199.208

Submitted On: 28 September 2010 Published On: 12 February 2011

How to Cite: Zreika, M. & Elkanj, N. (2011). Banking Efficiency in Lebanon: An Empirical Investigation. Journal of Social Sciences, 7(2), 199-208. https://doi.org/10.3844/jssp.2011.199.208

Abstract

Problem statement: The main goal behind this study is to identify whether banks are working at full efficiency or not and spot the changes in efficiency for banks operating in Lebanon after 2007 financial crisis. Approach: This study was conducted to examine the technical efficiency of 40 banks operating in Lebanon over the two sub-periods 2002-2006 and 2006-2009 using Data Envelopment Analysis (DEA). Results: The results from DEA show that the extent of technical efficiency varies across the banks. Citibank, HSBC, BBAC, IBL and FBL are found to be working at fully technical efficiency, while RBA, HBA, BCN, SGBL, BLA and SLCB are found to be prominently inefficient. Technical efficiency is the highest in large banks and lowest in small banks. Conclusion: After 2007 financial crisis, foreign banks have suffered more with technical efficiency decreasing in foreign banks, while local banks had a significant increase in technical efficiency. Small and medium banks are found to be working at increasing returns to scale, while large banks are working at decreasing returns to scale.

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Keywords

  • Data Envelopment Analysis (DEA)
  • Technical Efficiency (TE)
  • Pure Technical Efficiency (PTE)
  • Scale Efficiency (SE)
  • financial crisis
  • empirical investigation