AN ANALYSIS OF THE EFFICIENCY OF PRIVET COMMERCIAL BANKS IN ETHIOPIA

ABSTRACT This research analyzed the level of efficiency of privet commercial banks operating in Ethiopia. The research targeted the four banks: Dashen Bank;bank of Abyssinia; Awash international bank and Oromia Cooperative Bank; by market share in the economy. The research was carried out using data from the respective banks’ annual reports for the period 2010 to 2022. Analysis of the data was done through the Data Envelopment Analysis (DEA) method. The inputs and outputs used were defined through the intermediation approach. The DEA results indicate that Ethiopian banks generally operate close to full efficiency, though variations exist. Banks like Dashen Bank and Awash International Bank consistently achieved high efficiency scores, while Bank of Abyssinia and Oromiya cooperative bank exhibited fluctuating efficiency levels, particularly influenced by internal changes and market conditions. Furthermore, the overall average efficiency in the banking sector with respect to the banks investigated was around 95.4%, indicating that room for improvement exists. The presence of an efficient banking system is a clear indication of a sound intermediation process and hence the banks contribute to economic growth as well as a conduct of effective monetary policy