Assessing Performance and Efficiency of Financial Institutions through Data Envelopment Analysis (DAE)

Abstract

The paper has examined the efficiency or effectiveness of the major banks of Pakistan using the standard and alternative methods or approaches to Data Envelopment Analysis (DEA). The selection of Pakistan as a division or unit of research is to motivate and drive out from the abstract fact or actuality that the country has a developing banking division, so that its efficiency and effectiveness has been researched significantly. Data Envelopment Analysis (DEA) determines the effectiveness of Decision-Making Unit (DMU) by increasing or maximizing the proportion of prejudiced or weighted outputs across prejudiced inputs. Our research and findings are contrasts in numerous aspects from the previous researches. The purpose of this study is to propose an abstract or conceptual structure of sustainability to measure the working or performance by accumulating numerous latest, related and wide-ranging set of signs or indicators consist of environment, energy, financial or economic and more set-up structure. Results shows that the efficiency of The ZTBL and BTMU shows the maximum score in all efficiencies i.e., technical, pure and scale which means these two banks are efficient. On the other hand, regardless to these two banks, Oman international bank, Silk bank limited, HMBL and Citi bank shows higher technical efficiency score with respect to remaining banks, which means that the efficiency of these banks is much better than the remaining banks.