Efficiency of Banks in Pakistan: A Non Parametric Approach

Abstract

Banks play a vital role in growth and development of an economy through prudent allocation of capital resources and their efficient utilization. This study evaluates efficiency of banking sector of Pakistan, including both conventional and Islamic banking, for the time period 2006-2010 by covering a total of 22 banks; Sample includes 16 Conventional and 6 Islamic banks. Efficiency is measured through frontier non parametric technique of data envelopment analysis based on intermediation approach. During the sample period the banking sector was not much efficient in the year 2009 and the estimated efficiency scores recommend that Islamic banks performed more efficiently during the study period as compared to Conventional banks.