Technical Efficiency of Banks in the Franc Zone

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This paper explores the technical efficiency of banks and its determinants in the CFA Franc Zone between 2009 and 2014. Technical efficiency can be measured by comparing observed performance relative to optimal performance. The research applies an innovative DEA (Data Envelopment Analysis) model, the B-convex model to a representative sample of banks. It concludes that private domestic banks are slightly more efficient than foreign banks operating in the CFA Zone, and state banks recorded the lowest scores in terms of efficiency and productivity. The analysis of the determinants of efficiency scores shows that the efficiency of CFA zone banks is influenced by capitalisation and size of operations, and that inflation tend to improve efficiency. Income per capita and governance in the country of operation have no statistically significant effect on efficiency.

Author(s):

Louisa Andriamasy    
Université de Perpignan
France

Eric Paget-Blanc    
Université d'Evry - Val d'Essonne
France