Abstract
This study evaluates the performance of Ethiopian commercial banks using Data Envelopment Analysis (DEA) and the Malmquist Productivity Index (MPI) techniques. DEA results reveal a dual structure in the sector: frontier banks consistently achieved technical and scale efficiency, reflecting resilience to macroeconomic reforms, while others showed persistent scale inefficiencies, with strong input management under VRS but declining CRS scores due to suboptimal operational scale. MPI analysis adds a dynamic view, indicating that some banks improved productivity through better managerial efficiency and technological adoption, whereas others faced declines, particularly after 2020, when external shocks and reform pressures intensified. A group of banks maintained stable MPI values, reflecting consistent operational efficiency. These findings highlight the critical role of scale optimization, extensive use of information technology, and operative management. Policy implications include promoting branch consolidation, encouraging strategic mergers, while strengthening, particularly, Board oversight of underperforming banks to enhance resilience. Overall, the study underscores how managerial capacity, technological adoption, and structural reforms jointly shape the efficiency and productivity of Ethiopian banks, offering evidence-based guidance for both policymakers and banks managers.
Keywords: Bank Performance, Data Envelopment Analysis, Malmquist Productivity Index, Technical Efficiency, Scale Efficiency, Ethiopian Commercial Banks, Financial Reforms
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