Cost-efficiency and financial and geographical characteristics of banking sectors in the MENA countries

Abstract

We utilize the translog stochastic frontier model to estimate the cost-efficiency levels for conventional and Islamic, Cooperation Council (GCC) and non-GCC banks in the Middle East and North African (MENA) countries. The estimated cost-efficiency averages around 77% for those MENA banks, but with slight changes in this score for the individual countries. The results also show that the banks in the GCC countries are the most efficient in the region and the efficiency scores for the conventional and Islamic banks are similar. Finally, the recent financial crisis seems to have a slight impact on the observed efficiency scores of those banks. 1 2016 Informa UK Limited, trading as Taylor & Francis Group.