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| Abstract : Perpustakaan Tuanku Bainun |
| This study aims to identify the technical efficiency (TE) of ten Development Financial Institutions (DFIs) in Malaysia. Subsequently, this study intends to identify the determinants of their efficiency. The first objective is assessed using the Data Envelopment Analysis (DEA) estimation method under a non-parametric approach. The variables employed are fixed assets and labor as inputs, with financing as the output. The second objective is analyzed using Ordinary Least Squares (OLS) regression based on the estimation model. Five financial ratio variables are selected as determinants of DFIs_ efficiency, encompassing the ratio of capitalization, liquidity risk, bank size, profitability and credit risk. Both analyses are conducted on annual data spanning from 2009 to 2018, utilizing information derived from bank reports. The DEA results reveal that only Sabah Development Bank Berhad (SDB) achieved full efficiency levels at each stage of analysis (CRSTE=100%, VRSTE=100%, scale=100%). OLS results show that only the variables of bank size (t-test=0.017, p=5%) and profit ratio (t-test=0.035, p=5%) have a significant relationship with TE. In conclusion, with the exception of SDB, the remaining nine DFIs need to enhance their efficiency levels in accordance to the law of returns to scale through input and output orientation, ensuring efficient resource management. Top management should consider the variables of bank size and profitability ratio as crucial indicators for improving TE in DFIs. As an implication, this analysis offer valuable insights to the government for making informed operational decisions regarding DFIs, with the aim of fostering the contribution of the DFIs in developing and improving the socio-economic development of the country. |
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