THE DETERMINANTS OF ANGOLAN BANKS’ EFFICIENCY

Clara Pires; Carla Santos; Nádia Silva

doi:10.29121/granthaalayah.v11.i12.2023.5438

Authors

Clara Pires Management Department, Polytechnic Institute of Beja, ESTIG, Rua Pedro Soares, Campus do IPBeja, 7800-295 Beja, Portugal and Collaborator CEOS.PP, ISCAP, Portugal
Carla Santos Center for Mathematics and Applications (CMA) - FCT- New University of Lisbon, Portugal and Polytechnic Institute of Beja, Campus do IPBeja, 7800-295 Beja, Portugal
Nádia Silva International Student, Master’s in Finance and Accounting, Polytechnic Institute of Beja, ESTIG, Rua Pedro Soares, Campus do IPBeja, 7800-295 Beja, Portugal

DOI:

https://doi.org/10.29121/granthaalayah.v11.i12.2023.5438

Keywords:

Data Envelopment Analysis, Efficiency, Banking Sector, Angola

Abstract [English]

Globalization has led to a growing increase in financial institutions, as well as to the diversification of their services, due to the international circulation of capital. In view of this increase, the Angolan market has become progressively more competitive, making efficiency a major factor in its survival in the market.
This study aimed to analyse the determinants of efficiency in the Angolan banking sector by examining the period from 2014 to 2019. To achieve this objective, we first applied the non-parametric data envelopment analysis methodology to estimate the efficiency levels of banks, and in the second phase, we used a multiple linear regression to obtain an explanatory model of Angolan banking efficiency.
In the first stage, the classic Banker, Charnes and Cooper model was used with input orientation, employing the variables of staff expenses and deposits as the inputs, and the total credit as the output, ranking the banks descending order of their efficiency scores. In the second stage, through multiple linear regression, efficiency was expressed as a function of variables measuring the capital adequacy, asset quality, management quality, profitability and liquidity of the banks under study.
The variables that proved to be statistically significant in the efficiency of Angolan banking were the solvency ratio, the relationship between liabilities and equity and return on equity.

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