The Use of Data Envelopment Analysis in Banking Institutions : Evidence from the Uae Commercial Banks

The analysis of bank performance is important for investors, creditors and government. The paper aims at identifying the relatively best-performing banks and relatively - worst-performing banks in the United Arab Emirates. It also seeks to identify banks' efficiency scores and ranks. The main findings of this study are the following: (i) most of the UAE commercial banks appear inefficient when both the DEA and the traditional measures used; (ii) we found the national banks are relatively more efficient than the foreign banks; (iii) two traditional ratios namely, loans to deposits, and loans to total assets indicate that the UAE commercial banks somehow did not use the available resources properly. This suggests that there was an excess liquidity and therefore, the UAE commercial banks require to develop new strategies in order to utilise the avialable resources; (iv) the results obtained from the application of the two methodolgies DEA model and the traditional ratios are different which is consistent with previous studies