Keywords: DEA, data envelopment analysis, efficiency indices, African banks, performance evaluation, banking industry, benchmarks, Africa
Evaluating the performance of top African banks using Data Envelopment Analysis
The major aim of this research is to measure the relative efficiency of the top 100 African banks. The sensitivity of the results is also investigated. Data Envelopment Analysis (DEA) method was used to evaluate the relative efficiency of African banks. Cross-sectional data for the year 2005 were used to conduct the analysis. The results indicate that the performance of several banks is sub-optimal, suggesting the potential for significant improvements. Separate benchmarks were derived for possible reductions in resources used, and significant savings are possible on this account. From a policy perspective, this study highlights the importance of encouraging increased efficiency throughout the banking industry in Africa.