Data Envelopment Analysis (DEA) Approach for the Jordanian Banking Sector's Performance

Abstract

<p class="zhengwen">This study sought to evaluate the performance of banks in the Jordanian banking sector, where DEA approach has been used for a sample of banks operating in Jordan amounted to 16 banks (10 Jordanian banks and 6 foreign banks operating in Jordan) during 2014 and by using the variables: Deposits and liabilities<strong>,</strong> Total expenses<strong> </strong>and Dedicated asset as main inputs for banks and which represent the main activity of banks, and the variables : Credit facilities<strong> </strong>and Net Income<strong> </strong>as outputs of the banks using the statistical software SIAD.</p>The current study has concluded that all banks operating in Jordan have a surplus in resources untapped optimally and over the investment opportunities available to these banks, and the reason beyond this may be due to the reservation policy of banks, especially after the mortgage crisis suffered by these banks. The study has also concluded that foreign banks operating in Jordan have achieved efficiency ratio more than the Jordanian banks, and this can be attributed to the financing experience of foreign banks’ managements and their international spread which is more than the Jordanian banks’.