Analysing the Promised Effect of Liberalization on Banking Sector Efficiency in Ghana
This study assesses changes in banking sector efficiency in Ghana amidst deepening sector liberalization process. Using quarterly data from 2000q3 to 2011q4, data envelopment analysis was used to derive the overall technical efficiency, pure technical efficiency and scale efficiency for all licensed banks. Five alternative models were utilized. Generally, overall technical, pure technical and scale efficiencies reduced over time. The intensity and prevalence of scale inefficiency were higher than pure managerial inefficiency; increasing return to scale was more prevalent among scale inefficient banks than scale inefficiency. Finally, incidence of increasing returns to scale declined whereas decreasing returns to scale increased.
