A Study of Bank Efficiencies in Ghana

Abstract

An investigation of technical and scale efficiencies and returns to scale properties of 16 Ghanaian banks was conducted for insight into bank size and efficiency. A data enveloping analysis was performed on annual bank data from 2000 to 2006. Both intermediation and production approaches to bank behavior were modeled. Findings suggest higher average returns to scale for small banks than big banks with a p-value of 0.12. Also, there is indication that small banks as a group are operating closer to their lowest average cost than large banks. Based on these historical evidences, this study suggests that increased bank sizes may not
translate to higher technical nor higher scale efficiencies in Ghana.

JEL Classification: G21, G28

Keywords: Ghana, Banks, DEA, technical efficiency, scale efficiency