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MEASURING THE OPERATIONAL EFFICIENCY OF COMMERCIAL BANKS IN NAMIBIA
Author(s) -
Ikhide Sylvanus I.
Publication year - 2008
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2008.00214.x
Subject(s) - scope (computer science) , economies of scale , frontier , scale (ratio) , economies of scope , economics , industrial organization , cost efficiency , operational efficiency , economic efficiency , efficient frontier , business , environmental economics , macroeconomics , monetary economics , microeconomics , finance , computer science , physics , management , archaeology , quantum mechanics , history , programming language , portfolio , operating system
This paper examines the efficiency of commercial banks in Namibia using the standard econometric frontier approach. Although two aspects of efficiency (scale and scope) receive our attention, the emphasis is on the latter which pertains to whether a firm produces as efficiently as it possibly can, given its size. Our results indicate that substantial economies of scale exist in commercial banking in Namibia. This will tend to suggest that commercial banks in Namibia can increase their efficiency by increasing their current scale of operation. The results for scope economies show that the current level of input combination does not make for maximum efficiency as sufficient scope exists for a more efficient combination of inputs. We believe this will reduce operating costs in the industry and stimulate efficiency.