Efficiency of Moroccan banks: A Data Envelopment Analysis approach

Résumé

In a competitive environment, the quest for efficiency becomes an imperative for each firm in order to maintain its competitiveness within the sector in which it operates. The financial firm has its own particularities but does not escape this efficiency objective. In order to measure this efficiency, the literature highlights several approaches and methods, however, among the different frontier-based efficiency analysis methods used in the literature, data envelopment analysis has shown its power to be applied to different types of studies and in different contexts Paradi & Zhu (2013).

The purpose of this article is to evaluate the efficiency of Moroccan banks during the period 2017-2019. DEA Analysis was conducted with an input orientation and a variable return to scale assumptions. The choice of an input orientation is motivated by the fact that it is believed that banks can control and rationalize inputs more than outputs. On the other hand, it is believed that banks operate in different scales which motivate the choice of a variable returns scale. The meta-frontier tests were combined with the Malmquist index to analyze the total productivity change over time.

The results show that indeed Moroccan banks operate in a variable return to scale. Also, it was found that the average efficiency of all banks has changed over the study period. However, the scores recorded remain low and show that there is a serious inefficiency that needs to be corrected. For the analysis of the Malmquist index, it appears that the average improvement in total productivity of banks during the three years studied is not the result of technological innovation, but rather of the change in scale efficiency and pure efficiency; however, total productivity did not improve significantly throughout this period.