Conventional Banks and Productivity Level: The Malaysian Perspective

Data Envelopment Analysis (DEA) is specially adopted to assess the efficiency of conventional banks in Malaysia. Specifically, this paper investigates the productivity level of the conventional banks in Malaysia. The analysis is based on a data set of 20 banks over the period of 1998-2007. Results indicate that the conventional banks exhibit an improvement in their productivity index. While 14 banks register improvement in their productivity levels, 5 banks register deterioration in their productivity levels during the same period. This reveals that there is a minimal input waste. The results also suggest that the implementation of the Financial Sector Master Plan (FSMP) is somewhat effective as the overall efficiency level improves.