English Abstract
Abstract:
The study investigates the banks' efficiency in the Gulf Cooperation Council (GCC) countries'
members (GCC). The efficiency of the banking sector is a cornerstone in the financial development
of a country. It has also become a prominent label in both economic and financial lexicons due to
the lucid importance of the financial intermediation function it provides. The banking industry is
considered the backbone of the financial system in oil exporting countries of the GCC region. In
general, the advancement and stability of the banking sector are inextricably related to the total
economic output as measured by the GDP and to the stability of the financial system in particular.
This study aims to evaluate how efficient banking is in the six countries of the GCC bloc, and to
assess the effect of the oil price shock in 2014 on the bank’s efficiency in these countries. This study
employs the 2-stage Data Envelopment Analysis (DEA) methodology for this aim. This model
assigns efficiency scores for GCC banks over a period of time from 2008 to 2016 in the first stage.
The second stage of the model regresses the aforementioned efficiency scores against a variety of
financial and macroeconomic variables to depict the main determinants of bank efficiency and to
assess the banking sector's resilience to global shocks as well as to macroeconomic conditions. The
empirical outcomes of this study indicate that the global financial crisis (GFC) in 2008 and the oil
price shock in 2014 had a significant negative impact on the efficiency scores of the GCC banks.
The findings also show that domestic macroeconomic indicators have a greater impact on bank
efficiency than institutional or bank-specific variables.
JEL Classifications: E6, E44, Q4, G21
