Liberalisation, privatisation and the productivity of Egyptian banks: a non-parametric approach

Abstract

This paper evaluates the performance of Egyptian banks during a period characterised by changes in economic policies. The Egyptian government's liberalisation policies in the early 1990s have had a positive or negative impact on the performance of the Egyptian banks. In addition, whether the liberalisation impact has influenced different forms of banks' ownership and sizes with consistent magnitude is examined. Another objective of this paper is to examine the impact of the privatisation process at the end of 1995 on the efficiency and productivity performance of the overall banking sector and on joint-venture banks in particular. The data envelopment analysis Malmquist methodology is employed to estimate the productivity of Egyptian banks.

Keywords:

• efficiency and productivity analysis
• DEA
• banking
• financial development

Notes

See the surveys by Berger and Humphrey (1997) and Fethi and Pasiouras (2009) for comprehensive reviews of bank performance studies.

They are 100% state-owned banks.

Of which one bank was privately owned and acquired by foreign ownership (P_TF), 9 banks transformed from JV to foreign ownership during the privatisation process (JV_TF) and one bank was originally foreign-owned and remained foreign-owned.

Of which 6 banks transformed from JV to privately owned during the privatisation process (JV_TP).

The only JV bank that has not been involved in a ownership transformation is the Mohandas Bank. The bank is owned by state-owned banks and domestic private shareholders.

The data set could not be extended beyond 2002 due to unavailability of the data from the same source, which is the CBE library.

Technical efficiency change (i.e. relative to a CRS technology).

Pure technical efficiency change (i.e. relative to a VRS technology).

The horizontal red line represents the level of zero growth. Below the red line is productivity regress, and above the red line is productivity progress.

See Tables 9 and 10 for detailed presentation of these results.