Abstract:
The aim of this research is to use the tool of efficiency and productivity to minimise
management waste and improve on business practices since banks operating environment are changing. The research design used was the exploratory approach. Panel data from
nineteen banks collected from the financial statements of the banks for the period 2015
to 2021 was used in the study. In terms of the banking operation modal, the input-oriented
intermediation approach model was used for the study. Data envelopment analysis was
also used to analyse the efficiency and productivity using the CCR and BCC model and
Malmquist index respectively. Deap version 2.0 software was used to measure the overall
technical efficiency, pure technical efficiency and scale efficiency and the DEA
Malmquist index was also used to measure and assess changes in total factor productivity
changes, technical efficiency and efficiency changes. Most of the banks recorded an
improvement in efficiency level with a mean score of 84.5 percent and 90.10 percent
using the CCR and BCC model respectively but pure technical inefficiency had a big
impact on the inefficiency as compared to scale efficiency with a mean score of 93.7
percent. The overall results from the Malmquist index on productivity factor change
show that the total factor productivity change index regressed by 13.5 percent. Technical
change is found to be the most important source of productivity decline with a regression
of 11.9 percent. Efficiency change regressed by 1.8 percent with its decomposition pure
technical change and scale efficiency change regressed by 0.80 percent and 1.1 percent
respectively. The regress in total factor productivity change as a result of technical and
efficiency changes indicates that there is a great potential for the industry to increase
productivity through investment in technology and its utilisation, by constantly
equipping personnel with relevant technology advancement. Technical expertise training
should be constantly upgraded along with technological evolution.
