Nexus between Technical Efficiency and Market Competition in the Banking Sector: Revisiting Economic Performance and Risk Evaluation
AbstractThis study examined the impact of risk and competition on the technical efficiency of the Pakistani banks. Technical efficiency and its components are measured with The Data envelopment analysis (DEA) based CCR and BCC models. The Lerner index is used to measure competition among the Pakistani banks. For econometric estimation, the bootstrap truncated regression is used. The results of the study showed that the competition, risk, size, taxation, diversification, operational cost management, banking development, trade openness and infrastructure development significantly affected the Technical efficiency. The comparative study indicates that the state-owned banks have higher technical efficiency than the private, foreign and Islamic banks.
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