Examining the Impact of Global Financial Crisis in Bank Efficiency in Saudi Arabia

Authors

  • Md. Golam Solaiman International Islamic University Chittagong
  • Abdul Kadar International Islamic University Chittagong
  • Md. Abul Kalam Azad Bangladesh Army International University of Science and Technology
  • Peter Wanke Federal University of Rio de Janeiro

DOI:

https://doi.org/10.29015/cerem.580

Keywords:

Slack based model, data envelopment analysis, efficiency, Saudi Arabia

Abstract

Aim: The global financial crisis in 2008 has obstructed almost every bank around the world. This study examines the impact of global financial crisis on bank efficiency in Saudi Arabia.

 Design / Research methods: This study examines the impact of global financial crisis in bank efficiency applying the data envelopment analysis (DEA) during 2006-2014. Eleven commercial banks were examined from Saudi banking sector which covers almost half of total banks of Saudi Arabia. Scale efficiency, technical efficiency and productivity of banks have been examined for assessing the impact of financial crisis overtime.

 Conclusions / findings: Results reveal that banks in Saudi Arabia are inefficient in terms of technical and scale efficiency. The results also reveal these banks are not immune to the global financial crisis. Though only one bank has kept their unit efficient positions during the study period, the impact of global crisis on bank efficiency is found visible among other banks. The robustness of this study is also tested. 

 Originality / value of the article: The importance of this study is twofold. First, examining bank efficiency with special attention to financial crisis. Second, Saudi Arabia needs sustainable growth to be ensured. Hence, examination of impact of financial crisis on bank efficiency of Saudi Arabia will surely help the policy makers for future planning.

  Implications of the research: The findings of this study will assist the policy makers in Saudi Arabia for taking corrective measure in advance in case of such future financial crisis. Moreover, the results will be used by the managers of the respective banks for decision making and problem solving.

Author Biography

Md. Abul Kalam Azad, Bangladesh Army International University of Science and Technology

Associate Professor, Department of Business Administration, School of Business

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Published

2017-12-29

Issue

Vol. 1 No. 4 (2017): Data Envelopment Analysis for Performance Measurement in Developing Countries

Section

Articles

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