AN ANALYSIS OF BANKS PERFORMANCE IN PAKISTAN USING TWO-STEP DOUBLE BOOTSTRAP DEA APPROACH

This study analyzes the technical efficiency and sources of technical efficiency of conventional banking sector of Pakistan by applying the DEA double bootstrap technique. In the first stage, we applied the bootstrapped DEA variable returns to scale model for measuring the efficiency scores by utilizing the two inputs and three outputs. In the second stage, we employed the bootstrapped truncated maximum likelihood regression model to determine the sources of technical efficiency. As per our results, size of banks does not matter for technical efficiency of banks as the coefficient was insignificant. The liabilities of banks negatively and significantly affect efficiency of banks. Privately owned banks significantly perform better than public sector banks in terms of efficiency scores. Thus, our results shed support in favour of privatization hypothesis.