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n Management Dynamics : Journal of the Southern African Institute for Management Scientists - Assessing the relative efficiency management of South African banks

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Abstract

This study addresses the relative efficiency of South African banks as well as the challenges faced by bankers to develop management strategies that will improve areas of ineffectiveness in order to ensure sustainable profitability improvement.


The need for better efficiency management is confirmed by extreme occurrences in the South African banking sector during recent years. The intense liquidity pressures experienced by BOE Bank that resulted in its total inclusion into Nedcor to avert possible failure, the imposition of curatorship over FBC Fidelity Bank Limited (FBC), and the liquidation of New Republic Bank Ltd, Saambou Bank Ltd, and Regal Treasury Private Bank Ltd during the period 1997-2007 are examples of such incidents.
This study presents the results of applying Data Envelopment Analysis (DEA) to 13 South African banks to assess their present relative efficiency. Comparative scores that indicate the performance status of each bank relative to all other South African banks are used to identify focal points that will enhance the profitability of banks classified as inefficient. The limited number of banks in the South African banking sector and the size and niche differences between them constrain the generalisability of the results and must be regarded as a limitation of the study.

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/content/mandyn/16/4/EJC69730
2007-01-01
2016-12-04
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