Banking efficiency in Asian: A stochastic frontier analysise

Banking sector plays an important role in financial system of a nation. It is essential to ensure that banks are performing under efficient manor and to measure productive efficiency of banks as a basis for implication toward government policy, corporate governance and other managerial issues. Stochastic frontier analysis is essentially a sophisticated way to measure technical efficiency of banks. Based on data of 758 banks, the dissertation will study bank efficiency of Asian countries during the period of 1998 - 2007. The dissertation found that on average, Asian countries were performing relatively efficient with cost efficiency of 78%. The South Asian banks are the most efficient then comes to banks in Asean countries. Efficient banks in Asia tend to have low level of Non performance loan and high level of capital contribution. Also, the study found no significant relation between bank asset size and bank efficiency. The study is an attempt to address the lack of literature on banks efficiency in Asia. However, due to lack of data and data biases there are only some representatives Asian countries under investigation, namely India, Pakistan, Bangladesh, Singapore, Indonesia, Kazakhstan, Hong Kong, Philippines, United Arab Emirates, Turkey and Kuwait