EFFICIENCY OF THE ALGERIAN BANKS IN THE POST LIBERALIZATION PERIOD

Abstract

This study investigates the efficiency of the banks in Algeria during the period of 2000-2012. For this end, the efficiency of fifteen banks is estimated using Data Envelopment Analysis model. Furthermore, the technical efficiency is decomposed to determine the pure technical and scale efficiencies of the Algerian banks. Based on the intermediation approach it is assumed that bank uses two inputs; total deposits and interest expenses, and produces three outputs; total loans, interest income and non-interest income. The findings indicated that on average, the technical efficiency of the Algerian banks has improved during the period of study. The Algerian banks have achieved a high pure technical efficiency with an average equals 95%, while the scale efficiency is the main source of the banks technical inefficiency. In addition, the majority of the banks tend to operate at constant return to scale or decreasing return to scale.

Keywords

• efficiency
• data envelopment analysis
• algerian banking system