The relative efficiency of Yemeni banks using the data envelopment analysis method. Applied study for a sample of banks operate in Yemen during. the period (2010- 2020)

Abstract

The study aimed to evaluate the relative efficiency of a sample selected from banks operating in Yemen. The research adopted the evaluative approach to measure relative efficiency based on data envelopment analysis method according to the introductory direction and constant returns to scale and increasing returns to scale depending on the data included in the annual financial reports for the period 2010- 2020 for a sample of 8 banks and on the input items (deposits and capital) and outputs (loans and investments ,net income)included in the study model. The study resulted in some findings, the most important of which are:

the average relative efficiency of the banks in the study sample, according to input orientation and constant returns to scale and increasing to scale, reached 84% and 98% respectively. Moreover, only three banks achieved both relative and volumetric efficiency ,namely (Al Tadhamun Bank , Cooperative and Agricultural credit Bank , and The International Bank Of Yemen ). With regard to the remaining banks ( Sheba Islamic Bank , Yemen and Bahrain –Shamil Bank , Bank of Yemen and Kuwait , The commercial Yemeni Bank and The National Bank Of Yemen), they suffer from some shortcomings in achieving relative and scale efficiency .

The study concluded with a set of recommendations. These recommendations include that 

managers of banks that have not achieved complete efficiency should follow the systems adopted by the banks that have achieved complete efficiency. It is also necessary for them to investigate the reasons that prevented such success and they have to identify weaknesses in inputs and outputs, so they can use the available resources in an effective way.