Modeling the efficiency of GCC banks: a data envelopment analysis approach

Abstract

Purpose – The major aim of this research is to measure the relative efficiency of the top 50 Gulf Cooperation Council (GCC) banks. The sensitivity of the results is also investigated. Design/methodology/approach – Data envelopment analysis (DEA) was used to evaluate the relative efficiency of GCC banks. Cross-sectional data for the year 2005 were used to conduct the analysis. Findings – 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. Originality/value – From a policy perspective, this study highlights the importance of encouraging increased efficiency throughout the banking industry in the GCC.