Measuring Cost Efficiency by Stochastic Frontier Analysis (SFA) -Empirical Study on Private Traditional Banks Operating in Syria-
Keywords:
Stochastic Frontier, SFA, Cost Efficiency, Banking Efficiency, Parametric Methods. Syrian traditional private banks.Abstract
This research aims to measure the cost efficiency of traditional private banks operating in Syria during the period extending from 2011-Q1 to 2024-Q4. Cost efficiency was measured by using the parametric stochastic frontier (SFA) method, after determining the banking inputs and outputs through the intermediation approach, and after performing centered transformation on the studied variables, the Translog cost function model was estimated using Stata.17, the result showed that the financing price and credit facilities constitute the most important variables in terms of contribution to the total cost of banks. And the average cost efficiency for banks during the studied period was 54%. by studying the regression of the efficiency on time, it was found that the efficiency has no time effect during the studied period The results also showed that the Arab Bank-Syria is the bank was the best performance in the sample, while the Ahli Trust Bank was the least efficient among the studied banks.
