Pages: 6-10

Abstract

The efficiency of banking industry is used to both minimize cost commissions and to provide higher qualitative services. More efficient financial institutions will lead to lower expenses of interest-based loan and other facilities. In this study, we applied the Data Envelopment Analysis method to estimate technical efficiency of 130 branches of Melli Bank of Kerman province. To this purpose, the technical efficiency of Melli Bank branches of Kerman province was estimated in 3 groups, group 1 including branches with degrees of 1, 2 and 3, group 2 including branches with degree of 4 and group 3 including branches with degrees of 5 and 6. According to the results, under the condition of variable return of scale with output orientation, the technical efficiency for group 1, 2 and 3 were estimated 77%, 92% and 83% respectively. The main conclusion is that the 3 groups of Melli Bank branches of Kerman province could increase their production as much as 23, 8 and 17 percent. Optimum allocations of its resources (increasing technical efficiency), reforms on management styles. Also the results of this study indicates that 11, 27 and 25 percent of branches with degrees of 1, 2 and 3 has the decreasing return to scale, so that, decrease in size of production scale and decrease in production inputs can be used as effective policy.