An Analysis Of The Efficiency Of Commercial Banks In Namibia

ABSTRACT

This research analysed the level of efficiency of commercial banks operating in Namibia. The research targeted the big four banks: First National Bank, Bank Windhoek, Standard Bank and Nedbank; by market share in the economy. The research was carried out using data from the respective banks’ annual reports for the period 2011 to 2015. Analysis of the data was done through the Data Envelopment Analysis (DEA) method. The inputs and outputs used were defined through the intermediation approach. The findings show that over the period under investigation only two banks achieved optimal efficiency. The two banks getting optimal score does not necessarily mean there is perfect efficiency as this optimality is benchmarked in relation to the banks being analysed. Furthermore, the overall average efficiency in the banking sector with respect to the banks investigated was around 89.4%, indicating that room for improvement exists. The presence of an efficient banking system is a clear indication of a sound intermediation process and hence the banks contribute to economic growth as well as a conduct of effective monetary policy.