The Effect of Macroeconomic Stability State on Efficiency in the Banking Industry (MENA Countries)

اقتصاد پولی مالی

Article 3, Volume 19, Issue 3, January 2013   

Document Type: پژوهشی

DOI: 10.22067/pm.v19i3.28550

Authors

Saeid Eisazadeh^* ; Zeinab Shaeri

Abstract

Banking system is one of the important sections in the economy. In economies those
stock exchange and other financial intermediaries are inefficient this rule is vital. In
this regard the efficiency of banking system should be mentioned in the economy.
This paper examines empirically the effect of macroeconomic stability on efficiency
in the Middle East and North Africa (MENA) banking industry for the years 1995 to
2008 by Using panel data method. We use bank level data to study the efficiency of
banks in MENA countries and provide possible explanations for the difference in the
efficiency levels of banks. We find that banks, on average, could save 20 percent of
their total costs if they were operating efficiency. Through the stochastic frontier
approach (SFA) method we measure the cost efficiency of different banks in MENA
including Iranian banks. Then we investigate the impacts of macroeconomic State
on the efficiency level of banking industry. In this study are as inflation rate and
GDP per capita. The findings show that, the stability macroeconomic stability has
increased efficiency during the period of study.

Keywords

Efficiency; stochastic frontier approach; Inflation