Trends in New Zealand Bank Efficiency over Time

This paper explores the extent of efficiency improvements achieved by New Zealand banks over the period 1996 to 2002, using data envelopment analysis (DEA), on a time-series, rather than cross-sectional basis. <p> Evidence is found for improvements in bank efficiency through time, some of which can be attributed to falls in the general level of interest rates, although a further portion may be due to either management effort to improve bank efficiency or technical progress. <p> Because some of the results obtained appear to be a consequence of the methodology, rather than necessarily being consistent with other interpretations of the data, the paper also provides insights into complications that can arise with use of DEA.