Being a state-owned bank is not a fatality: An Algerian case study

Abstract

The Algerian banking industry is clearly dominated by the six state-owned banks (SOBs) which represent more than 85% of total banking asset. While it is widely admitted that public ownership in developing countries is often correlated with inefficiency and waste of resources, performance management in SOBs branches is mostly operated using basic accounting ratios. The data envelopment analysis (DEA) is a more sophisticated approach which if designed properly may enhance significantly SOBs branches' performance by creating the competitive pressure that is generally unattainable in public sectors. This research demonstrates all the potential of the DEA technique as a comparative performance measure in enhancing the efficiency of public bank branches. To that aim, the radial and super-efficiency DEA models are conjointly applied.