The Nexus of Efficiency and Profitability: A Case Study of Private Commercial Banks of Pakistan
The study aimed at exploring the relationship between efficiency and profitability of private commercial banks operating in Pakistan. The efficiency represented by technical efficiency has been assessed by non-parametric data envelopment analysis approach while profitability indicated by return on assets has been computed through conventional ratio analysis for period 2009 to 2013. The analysis revealed that technical efficiency declined during the study period and remained at 89%. HMB was identified as the top-performing bank in technical efficiency while MCB remained highly profitable. Banks were then grouped based on TE and ROA. MBL, UBL, DIB, SCB, BAH, HBL and HMB observed as top-performing banks based on TE and ROA. These banks are considered a role model for other inefficient and less profitable banks. Whereas, other banks were grouped as weak, based on below-average ROA and TE scores. These banks can adopt distinct product mix or business strategies to become profitable in future.
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Efficiency, Profitability, Commercial Banks, Return on assets, Technical Efficiency, Data Envelopment Analysis.
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(1) Farhat Ullah Khan
Assistant Professor, Department of Business Administration, Gomal University, Dera Ismail Khan, KP, Pakistan.
(2) Aman Ullah Khan
Assistant Professor, Department of Business Administration, Gomal University, Dera Ismail Khan, KP, Pakistan.
(3) Siraj -Ud- Din
Assistant Professor, Department of Management Sciences, Khushal Khan Khattak University, Karak, KP, Pakistan.
Pakistani Firms' Efficiency: An Empirical Study of Pakistan Stock Exchange through Data Envelopment Analysis
This paper investigates listed firm efficiency on Pakistan Stock Exchange by using Data Envelopment Analysis (DEA). The reason for application and calculation of the DEA score is to know how much the firms are efficient in utilizing their resources to be converted into output (sales/Net Income). An optimization technique (DEA) that helps calculate efficiencies of firm’s decision making Units (DMU’s) by taking different inputs and outputs variables. This paper uses DEA in measuring efficiency of 136 Pakistani firms listed on Pakistan Stock Exchange (PSX). Using secondary data set of 136 firms for the period 2008-2017, efficiency measurements are calculated by using financial ratios and financial indicators as input and output variables. Results show that some of the firms are efficient in utilizing their available resources in an efficient way to convert it into output, while some are inconsistent in efficiently utilizing their resources (inputs) to get the desired outputs.
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Data Envelopment Analysis, Overall Technical Efficiency, NonFinancial Sectors, Pakistan Stock Exchange (PSX)
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(1) Muhammad Nisar Khan
PhD Scholar, Abdul Wali Khan University Mardan, Mardan, KP, Pakistan.
(2) Adnan Ahmad
Assistant Professor, IBL, Abdul Wali Khan University Mardan, Mardan, KP, Pakistan.
(3) Noor Jehan
Assistant Professor, Department of Economics, Abdul Wali Khan University Mardan, Mardan, KP, Pakistan.
The Impact of Education, Health, Experience and Government Loans on Farmers Productivity in District Nowshera
This study generally examines the influence of education, health, experience and government loans on farmers productivity in district Nowshera. Specifically, this study (a) finds out the role of socio-economic factors determining tomato production in district Nowshera and (b) estimates technical efficiency of the tomato farmers in the area. Primary data has been collected through a field survey from 61 tomato producers of selected villages of the district. The results reveal on the average tomato farms in the study area are 95% efficient, indicating a 5% potential for the farms to attain the maximum output level while the range of efficiencies was 89% to 99%. Moreover, the results also showed education, health, experience and government loans playing a significant role in the determination of the tomato production. On the basis of these results, it is suggested that government increase spending on education and health as such loans can play an important role in the tomato farming in district Nowshera.
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Cobb Douglas Production Function, Technical Efficiency, Determinants, KP (Khyber Pukhtunkhwa)
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(1) Imran Ullah Saeed
PhD Scholar (Economics), Department of Economic, Federal Urdu University, Islamabad, Pakistan.
(2) Muhammad Jehangir
Assistant Professor, IBL, Abdul Wali Khan University Mardan, Mardan, KP, Pakistan.
(3) Muhammad Tariq
Assistant Professor, Department of Economics, Abdul Wali Khan University Mardan, Mardan, KP, Pakistan.