EMPIRICAL STUDY OF COMMERCIAL BANK PERFORMANCE IN MALAYSIA VIA DEA MODEL

This study evaluates the financial performance of domestic commercial banks in Malaysia over the period 2001 to 2011. The sample consists of eight domestic commercial banks listed on the Malaysian Stock Market (Bursa Malaysia). Secondary data were sourced mainly from the banks’ annual reports and extracted from the DataStream of Thomson Reuters. Bank performance was analyzed using Data Envelopment Analysis (DEA) with an intermediation approach, employing interest expense and non-interest expense as input variables, and advances, loans, and investments as output variables in the efficiency score analysis. The DEA results reveal that the overall mean scale efficiency score (92.98%) is higher than the mean technical efficiency score (71.33%), indicating that during the study period, domestic banks were more efficient in optimizing economies of scale due to their size than in controlling operational costs.