Examining the Efficiency of Commercial Banks in Lebanon : A Data Envelopment Analysis Approach

This study evaluates the key performance indicators of the banking sector in postwar Lebanon, in an attempt to assess the efficiency of the sector in producing the conventional outputs. Efficiency examines the performance of a Decision Making Unit (DMU) i.e., bank, company, organization etc. by comparing with other DMUs. Data envelopment analysis (DEA) is a common tool for benchmarking efficiency in recent literature. This study examines the impact of bank efficiency in Lebanon applying the DEA method. This study shows Malmquist DEA methods to panel data to calculate total factor productivity (TFP) change; technological change; technical efficiency change and scale efficiency change to measure the efficiency of Lebanese commercial Banks. Data envelopment analysis (DEA) is a common research method in recent literature. Total 14 commercial banks overing a period from 2009 to 2013 were examined. The findings of this study shows the efficiency of commercial banking system of Lebanon is inefficient. The findings also indicate that the selected banks have become less efficient over the period of study