This study aims at measuring the cost performance efficiency of
Syrian banking sector during the period 2006-2010. The selected period has
been going through a lot of reforms to build an effective, efficient,
competitive, and stable banking system
. The study employs both parametric
Stochastic Frontier Analysis (SFA), and non-parametric Data Envelopment
Analysis (DEA). These methods are used to evaluate the cost efficiency of
Syrian banks. The study utilizes a one stage SFA model that includes input,
outputs and the environmental variables (ownership structure, size,
deregulation, market structure, and capital ratio) of cost efficiency
measurements. Moreover, the traditional DEA model has been used with
the aim of comparing the results of the SFA model. The results of SFA
analysis indicate that the cost efficiency of Syrian banks is estimated to be,
on average, 58.8%, while the DEA model results shows an average of 69.5%,
the results also show that private banks are more efficient than state-owned
banks using both SFA and DEA analysis. The study also found that large
banks are more efficient than smaller banks.
