Are the best African banks really the best? A Malmquist data envelopment analysis

Desta, Tesfatsion Sahlu

doi:10.1108/medar-02-2016-0016

Cited by 23Efficiency Analysis Using DEABanking stability, regulation, efficiencyBanking Sector Performance and Management

Are the best African banks really the best? A Malmquist data envelopment analysis

Desta, Tesfatsion Sahlu·2016·Meditari Accountancy Research

DOI 10.1108/medar-02-2016-0016

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Abstract

Purpose: This paper aims to examine whether the African commercial banks selected as the best African banks by Global Finance Magazine really are the best. Design/methodology/approach: Panel data envelopment analysis (DEA) was used, as well as the Malmquist total factor productivity index, to distinguish productive banks from unproductive banks. Nineteen commercial banks were selected from the 30 best African banks as identified by the Global Finance Magazine. Findings: Of the 19 banks, five were found to be unproductive. Bank productivity was attributed mainly to technological change, and different methods marked different results, for example, the regional winner bank (Standard Bank of South Africa) selected by Global Finance Magazine ranked ninth in this study, whereas the Bank Windhoek Limited, Namibia, ranked first. Practical implications: The study confirms the applicability of DEA for the banking industry. The model shows variability among the banks’ efficiency and productivity and provides different results to the Global Finance Magazine’s best bank selection. For example, the Standard Bank of South Africa, which is selected as the regional winner, is now ranked ninth under the DEA Malmquist’s total factor productivity. Originality/value: The study shows that the DEA model can be applied not only for analysing the firm’s efficiency but also for objective rating, ranking and selecting best banks.

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The DEA methodology is flexible and accurate in analyzing the relationship between multiple outputs and inputs.
“This study uses the DEA methodology for efficiency analysis because of its flexibility and accuracy in analyzing the relationship between multiple outputs and inputs”
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Authors: Desta, T. S.
Affiliations: University of South Africa (ZA)
Corresponding author: Desta, Tesfatsion Sahlu
ORCID: Desta, Tesfatsion Sahlu
Venue: Meditari Accountancy Research
Publisher: Emerald
Published: 2016-10-03
Volume: 24
Issue: 4
Pages: 588-610
ISSN: 1022-2529 (ISSN-L)
2049-372X
DOI: 10.1108/medar-02-2016-0016
OpenAlex: W2519048092
Cited by: 23
References: 49
Citations by year: 2026: 2 · 2025: 2 · 2024: 2 · 2023: 5 · 2022: 4 · 2021: 2 · 2020: 4 · 2019: 2
FWCI: 0.73
Type: journal article
Language: en
Open access: closed
Licence: www.emerald.com/insight/site-policies (tdm)
Locations: Meditari Accountancy Research (publishedVersion)
Topics: Social Sciences › Decision Sciences › Management Science and Operations Research › Efficiency Analysis Using DEA
Social Sciences › Economics, Econometrics and Finance › Finance › Banking stability, regulation, efficiency
Social Sciences › Business, Management and Accounting › Accounting › Banking Sector Performance and Management
Keywords: bank productivity, total factor productivity, Malmquist productivity index, data envelopment analysis, bank efficiency, technological change

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Are the best African banks really the best? A Malmquist data envelopment analysis

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