Cost and Profit Efficiency of Kenyan Banks
Date
2014-01-09
Authors
Ayeyemi, Omowunmi Morayo
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Abstract
This study investigates the cost and profit efficiency of Kenyan banks.
This study uses published financial information to carry out stochastic frontier
analysis, an econometric technique, to determine if there has been any change
in the cost and profit efficiency of Kenyan banks from 2003 to 2009, following
the introduction of financial sector reforms by the Kenyan government. It also
investigates the relationship between cost and profit efficiency, and the
relationship between cost and profit efficiency and bank size, foreign or local
ownership and listing on the Nairobi stock exchange.
The results of the study showed that there were no statistically significant
changes in cost or profit efficiency over the period. Larger banks were found to
be more cost efficient than smaller banks, and listed banks were more cost
efficient than non-listed banks. There was no difference in cost efficiency
between foreign and locally owned banks. There were also no differences in
profit efficiency between large and small banks, foreign and locally owned
banks and listed and non-listed banks.
Description
MBA thesis
Keywords
Banks and banking - Kenya