Benchmarking top Arab banks' efficiency through efficient frontier analysis

The major aim of this research is to measure the relative efficiency of the top 100 Arab banks. The sensitivity of the results is also investigated.

Data envelopment analysis DEA method was used to evaluate the relative efficiency of Arab banks. Cross‐sectional data for the year 2005 were used to conduct the analysis.

The results indicate that the performance of several banks is sub‐optimal, suggesting the potential for significant improvements. Separate benchmarks were derived for possible reductions in resources used, and significant savings are possible on this account.

From a policy perspective, this study highlights the importance of encouraging increased efficiency throughout the banking industry in the Arab world.