Journal of Finance, Banking and Investment, Vol. 4, No. 1, March,

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1 Slack-Based Techical Efficiecy Aalysis for Deposit Moey Baks i Nigeria Asekome, Mike Ozemhoka 1 & Ihesekhie, Orobosa Abraham 2 1 Departmet of Ecoomics, Bakig & Fiace, Beso Idahosa Uiversity, Bei City, Nigeria. masekome@biu.edu.g, Tel Departmet of Ecoomics, Bakig & Fiace, Beso Idahosa Uiversity, Bei City, Nigeria. P.M.B 1100, Abstract This study ivestigates the iput ad output slacks as determiats of the relative techical efficiecy of Deposit Moey baks i Nigeria ad specifically provides empirical evidece o the relative iput wastages ad output shortfalls that could have bee improved upo by the respective baks i Nigeria to achieve 100% techical efficiecy. Relyig o the Slack-Based Methodology of Data Evelopmet Aalysis (SBM-DEA) to determie the relative techical efficiecy of the respective baks, the study recommeds how each bak could have reduced its slacks to achieve 100% techical efficiecy i its operatios. Keywords: Slack-Based, Techical Efficiecy, Deposit Moey Baks, Nigeria 1.0 Itroductio The profitability of baks depeds o how efficiet they used a combiatio of iputs to geerate outputs. The iputs iclude both huma ad material iputs. The huma iputs iclude the umber of employees, the maagerial quality of the employees, their job allocatio ad fuctios ad how effective they carry out their fuctios icludig effective supervisio. The material iputs iclude the resources deployed such as shareholder fuds, customer deposits ad physical assets. These iputs are used to geerate outputs which iclude loas ad advaces, profits, value added ad ivestmets (Asekome, 2014). The ultimate desire of ay bak is to icrease profitability by usig miimal iputs to geerate maximum outputs. The higher the ratio betwee output ad iput the greater the efficiecy of baks ad vice versa. If a bak uses more tha the miimal iput to produce a give output, the there are iput wastages called iput slacks. As well, if a bak produces lesser output from the expected give iput, the there are output slacks. Efficiecy ad productivity i baks may deped o the ability ad competece of seior maagemet ad board of directors to allocate ad cotrol over-head expeses. It is logical ad ratioal to believe that ecoomically, bak maagemet would edeavor to miimize operatig expeses with a view to maximizig profitability. However, Edwards (1977) ad Williamso s (1963) positio deviates from this view arguig that uder the expese preferece theory, bak maagemet may prefer utility maximizatio rather tha profit maximizatio by icreasig staff expediture, maagerial emolumets ad thus makig oly discretioary profits. Efficiecy ratios which are used to differetiate efficiet from iefficiet baks are popular tools for measurig the amout of iputs eeded to produce oe uit of operatig reveue that may cosist of iterest icome ad oiterest or fee icome (Hays, Lurgio ad Gilbert (2011). Bakig efficiecy may be classified ito differet types such as techical, allocatio ad cost efficiecy all of which costitute ecoomic efficiecy. The relative ecoomic efficiecy of firms may be compared by the costructio of productio frotiers. I a situatio of costat returs to scale (CRS), efficiet firms are those that are able to use the miimum possible set of iputs to produce a give output uit. 1.2 Statemet of the Research Problem Several studies have revealed that iput or output slacks are the major causes of iefficiecy i baks that may be attributed to variatio i level of techology, ecoomics of scale as well as huma factors (Fried, Lovell ad Schmidt: 1994) the extet ad magitude of these slacks have ot bee specifically determied for each baks by few available studies especially i less developed coutries like Nigeria. Although few studies o bakig efficiecy 87

2 i Nigeria idicated the level of techical efficiecy (Abraham & Oguiyi (2010), Muhammed (2008) ad Olaosebika (2009), there have bee o further work that have specifically idetified the iput ad output slacks ad the improvemets eeded to raise the techical efficiecy of each bak i Nigeria to 100%. Util such detailed fidigs are made available, it shall ot be easy to idetify the level of iefficiecy due to such slacks. It shall also ot be possible to provide relevat recommedatios o measures to reduce such wastages ad to improve o the level of efficiecy of baks operatig i the coutry ad other developig coutries with similar operatig eviromet. 1.3 Objectives of the Study The objectives of this research is to examie the iput ad output slacks as a measure of relative techical efficiecy of deposit moey baks i Nigeria as well as to specifically estimate the relative improvemets that were eeded by the respective baks to operate at 100% techical efficiecy frotier. 1.4 Hypotheses Based o the above objectives, the hypotheses for the study are: i. That deposit moey baks i Nigeria are ot techically efficiet ii. That deposit moey baks i Nigeria do ot have zero operatioal iputs ad outputs slacks 2.0 Review of the literature Bakig efficiecy measuremet has attracted lots of studies i the literature (Berger ad Humphrey (1997). Asekome ad Aihie (2016) oted that previous studies i Nigeria by Abraham & Oguiyi (2010) usig the multistage DEA model revealed that 25% of the baks were iefficiet. Although, the study attributed the iefficiecy to scale iefficiecy or iappropriate uses of iputs, it did ot idicate the specific slacks i the iput ad output matrix ad the improvemet eeded to achieve 100% techical efficiecy. Sobodu & Akiode (1998) i their study o bak performace ad supervisio i Nigeria durig the trasitio to a deregulated ecoomy used the DEA for data aalysis coverig the period to determie the relative efficiecy of baks i Nigeria. They used five alterative DEA models ad selected iputs ad outputs to costruct the alterative models: I the first model, they selected iputs to iclude total deposits; iterest expeses; total capital; ad overhead expeses while output cosisted of Gross earigs ad earig assets (loas ad advaces). I the secod model they selected iputs to iclude iterest expeses, total capital ad over-head expeses while output cosisted of Gross earigs ad earig assets. I the third model, they selected iputs to iclude iterest expeses, total capital ad over-head expeses while output variables cosisted of Gross earigs ad earig assets. They wet further to use a fourth model selectig the iput variables to iclude iterest expeses, total capital ad over-head expeses while output variables cosisted of gross earigs ad earig assets. Fially they used a fifth model to iclude total deposits, iterest expeses, ad total capital expeses as iputs while outputs cosisted of Gross earigs ad earig assets The study cocetrated o ivestigatig ad evaluatig the effect of the structural adjustmet programme (SAP) as well as the policy effects of fiacial sector deregulatio o the quality of maagemet ad thus efficiecy of the Nigeria bakig system. The objective was to evaluate the sigificace of chages i maagemet quality, measure relative efficiecy ad to assess the sigificace of the differeces betwee the so called healthy ad distressed baks as classified by moetary authorities. To facilitate iter temporal ad cross sectioal data compariso, they aggregated the etire sample of baks with cosistet data availability durig the period of study icludig the so called old ad ew geeratio baks as well as private ad govermet owed baks. The study revealed amogst others that the bakig idustry efficiecy declied sigificatly durig the years immediately followig the adoptio of deregulatio with shift improvemet i subsequet years which accordigly was attributable to policy icosistecy effect Sobodu & Akiode (1998), p 3. Although the authors used five DEA models with various iputs ad output variables, coverig the period 1983 to 1993 that that witessed frequet policy chages o bakig sector regulatio i Nigeria, the study however was silet o productivity measuremet, specific slacks measuremet. As well, the study did ot specifically determie the improvemets eeded to raise the techical efficiecy to 100% by elimiatig iput ad output slacks durig the period covered by the study. 88

3 Olaosebika (2009) carried out a study o the efficiecy of Nigeria Baks from 1995 to It covered the period before ad after the icrease i miimum capital requiremet. The study applied the itermediatio approach ad selected two iputs (loas ad liquid assets) with three iputs (capital, deposit ad labour) measured i thousads of aira. Labour was measured i umbers of employees. Usig the DEA methodology the results idicated that the Nigeria bakig efficiecy fluctuated durig the early part of the period ad showed sigs of steady improvemet durig the latter part of the miimum capital requiremet implemetatio period (Olaosebika (2009), p.3. He, however, posited that like i may other sub-sahara coutries, there are several other challeges icludig high overhead costs, persoel costs, loa loss provisioig, poor ifrastructure, iflexible labour markets ad cumbersome commercial courts. These results agreed with those of Sobodu & Akiode (1998) as well as those of Isik & Hassa, (2002); Hauer & Peiris, (2005) i Ugada. Although these factors were challeges that could have affected performace, the studies were silet o the extet to which they affected productivity, ad as well, did ot specifically idicates quatifiable improvemets eeded to achieve zero slacks ad thus achievig 100% techical efficiecy. Asekome (2014) coteded that a close observatio of the selectio ad combiatio of iputs ad output variables shows that all the iputs ad output variables used i some previous studies i Nigeria were selected from the same basket of variables i which case may of the iputs ad outputs variables i the models were repeatedly selected. The implicatio is that the differet models with various iputs ad output combiatios used for the study would defiitely give varyig results i the data aalysis ad thus with possible evetual aalytical ad cotroversial explaatios o the level of the relative techical efficiecies of the respective baks. I this study we wide the scope ad umber of variables with emphasis o those that are more relevat to the bakig itermediatio process. By usig oe composite variable model, this approach reduces the eed for multiple explaatios o the fidigs from our data aalysis with more effective cocludig remarks. This is i recogitio that the DEA cosiders ad provides results o relative rather tha absolute efficiecy performace. 3.0 Methodology The sample size i this study is made up of the 15 commercial baks that were publicly quoted o the Nigeria Stock Exchage durig the period from 2005 to The data were obtaied from the Cetral Bak of Nigeria Statistical Bulleti, the various commercial baks aual fiacial statemets, the Nigeria Stock Exchage Fact Book ad the NDIC aual reports. The Data Evelopmet Aalysis proposed by Chares, Cooper ad Rhodes (1978).ad the Slack-Based Methodology SBM-DEA Toe:(2002) are applied to aalyze the data. The DEA model measures the relative techical efficiecy of a homogeous set of decisio makig uits that use multiple iputs to produce multiple outputs such as baks. For the purpose of this study, the four iput variables are total deposits, physical capital, operatig expeses ad umber of employees. The four output variables are gross loas ad advaces less o- performig loas (et loas ad advaces), ivestmets, et after tax ad value added. Data evelopmet aalysis (DEA) ca be iput if it defies the efficiecy frotier by idetifyig the maximum possible proportioal reductio i the use of iputs while holdig the output costat while the output orieted approach strives to achieve the maximum possible output while usig a fixed level of iputs Coellli & Rao, (2005).Uder the costat returs to scale (CRS) techology, the two approaches gives the same techical efficiecy results but provides uequal scores whe operatig uder variable returs to scale (VRS). The DEA methodology sets a bechmark efficiecy where scores are assiged as uity or less ad a idividual firm lies betwee 0 ad 1 depedig o the relative efficiecy of the firm. 3.1 Model Specificatio ad Data Aalysis I this study we are evaluatig the relative efficiecy of commercial baks (DMUs) represeted respectively by j = 1, 2, 3 N. We assume that each bak uses x ὶ iputs to produce y r outputs. Thus we specify the relative efficiecy (h o ) for each bak (DMUo) by the followig liear programmig problem. 89

4 Maximize s h o = u r y ro - u o r=1 Subject to: m v ὶ x ὶo = 1, ί=1 s m u r y rί - v ί x ίj - u o < 0 (1) r=1 ί=1 u r Є, v ί > Є For ί = 1, 2, 3... M, r = 1, 2, 3.. S ad j = 1, 2, 3..N The subscript 0 represets the jth bak or DMU beig evaluated. X rj deotes iputs (ί) for each bak j, while y rj deotes the output (r) for each bak The weights u r ad v ί represet the shadow cost price of oe uit of outputs ad iputs respectively for each bak. Therefore i lie with the Chares, Cooper ad Rhodes (1978) ad the Baker, Chares ad Cooper (1984) models, this expectatio gives a pair of expressios for a liear programmig problem, ad the dual problem model is to: m s Miimize Ѳ o Є S ίˉ + + S r (2) ί=1 r=1 Subject to: Ѳ o Xί o = xί j λ j + Sὶˉ = o for ί=1, 2, 3.. M j=1 y rj λ j S + r - = y ro, λ:>0, S j > 0, S + r > 0 (2) j=1 For ί = 1, 2, 3, M, r = 1, 2, 3, S, j = 1,2,3 N 1 = λ oj, j=1 The symbol Ѳ is a scalar that takes a value greater tha or equal to oe (Ѳ > 1) ad Ѳ 1 is the proportioal icrease i outputs that could be achieved by the jth bak whe the iputs are held costat. Similarly 1/Ѳ gives the techical efficiecy (TE) that varies betwee zero ad oe for output orieted techical efficiecy score. The scalar variable Ѳ measures the level of efficiecy uder the terms of iput orieted costat returs to scale (CRS). The optimal values of s+, s- ad λ j must be positive ad thus satisfies the iequalities y ro < y rί λ ί ad Ѳ o x ίo > x ίj λ j (3) ἰ=1 j=1 For r = 1, 2, S, ί = 1, 2, M The symbols s+ ad s- are slacks represetig output short falls ad iput surpluses respectively. Techical efficiecy could best be obtaied by excludig the slacks ad this is achievable if ad oly if, all the followig coditios apply: Ѳ = 1, ad S + r = 0, S - ί = 0 For ί = 1, 2, 3... M ad r = 1, 2, S The coditio Ѳ = 1 implies that DMUo is located o the productio efficiecy frotier where S + r ad S - r beig equal to zero. I lie with Toe (2002), we could as well reformulate a equivalet output orieted DEA model as follow: 90

5 Maximize m s λr j + Є S ίˉ + S r + j=1 =1 r=1 Subject to: Ѳ*X ίo = x ίj λ j - S - ί for ί = 1, 2, M j=1 y ro = y rj λ j - S + r for r = 1, 2, S j=1 λ j < 1 (4) j=1 With 0 < λ j, S - ί, S r + Where Ѳ* is the optimal value of Ѳ from equatio (4) above I evaluatig the performace of commercial baks i Nigeria, this study attempts to ascertai how well the baks performed durig the period of the study ad how much their performace could be improved upo ad thus the study attempts to fid the maximum iputs that could icrease output proportioately without ay iput slacks (wastages) while achievig the highest possible output without output short falls or slacks. 4.0 Empirical Results ad Discussio of Fidigs The results of the data evelopmet aalysis obtaied uder costat retur to scale (CRS), variable retur to scale (VRS) as well as scale efficiecy of the aalysis are show i the table. The techical efficiecy scores show that oly 2 baks (Stabic ad Sterlig baks) were operatig at costat returs to scale while 13 baks were operatig uder decreasig returs to scale as show i table 1 below. No bak operated at icreasig returs to scale. Table 1: Techical ad Scale Efficiecy Scores for Deposit Moey Baks i Nigeria S/N DMU (BANKS) Variable Retur to Costat Retur to Scale Scale (BCC) Scale (CCR )Techical Techical Efficiecy Efficiecy Efficiecy Remarks 1 Access Bak Drs 2 Diamod Bak Drs 3 Eco Bak Drs 4 FCB Bak Drs 5 Fidelity Bak Drs 6 First Bak Drs 7 GTB Drs 8 Skye Bak Drs 9 Stabic IBTC Bak Crs 10 Sterlig Bak Crs 11 UBA Drs 12 Uio Bak Drs 13 Uity Bak Drs 14 Wema Bak Drs 15 Zeith Bak Drs Mea Author s computatio from DEAP Versio 2.1, upublished Ph.D thesis, 2014 Iput ad output Variable Scores 91

6 The iput variable slacks i table 2 below show the amout of excess iputs beig used to produce a give output while output slacks show the output deficiecy from a give level of iputs. I a perfectly techical efficiecy productio situatio, it is expected that both iput ad output slacks should be reduced to zero. Slacks idicate potetial improvemet i iput ad output variables eeded to operate at the efficiecy frotier. Table 2: Summary of Iput ad Output Slacks Scores Summary of Output Slacks Summary of Iput Slacks S/ DMU Customer Fixed Operatig Performig Ivestmets Profit After Value Added No. of N (BANKS) Deposits Assets Expeses Loas(N) (N) Tax (N) (N) Employees (N) (N) (N) 1 Access Bak Diamod Bak Eco Bak FCB Bak Fidelity Bak First Bak GTB Skye Bak Stabic IBTC Bak Sterlig Bak UBA Uio Bak Uity Bak Wema Bak Zeith Bak Mea Source: Author s Computatio from DEAP versio 2.1; upublished PhD thesis, 2014 The table 2 above shows that the 7 baks that were techically iefficiet uder costat ad variable retur to scale had output slacks of various amouts while the same baks also had iput slacks of various amouts. The mea output slacks of the iefficiet baks were N1,067, , N2,822, , N797, ad N480, respectively for performig loas ad advaces, ivestmets, profit after tax ad value added. This implies that these baks had their largest output short fall i ivestmet, followed by performig loas. They eeded to have improved o these outputs. The mea iput slacks for the iefficiet baks were N684, , N14, , N311, respectively for total customer deposits, fixed assets ad operatig expeses ad 136 umber of staff. These slacks could be reduced without reducig the level of outputs. For the efficiet baks that ejoyed techical ad or scale efficiecy, iput ad output slacks were observed to have bee elimiated or reduced to zero. Potetial Improvemet for idividual Deposit Moey Baks i Nigeria Access Bak The techical efficiecy of the bak was 40.7% uder costat retur to scale (CRS) ad 61.2% uder variable retur to scale (VRS). To attai the 100% techical efficiecy target, the bak eeded to improve its performig loas ad advaces by 63.41%, ivestmets by 83.33%, profit after tax by %, Value added by 10.75% while iput variables should have bee improved upo by 0.73%, 23.84% ad 7.9% respectively for fixed assets, operatig expeses ad umber of employees. Diamod Bak Although the bak scored a techical efficiecy of 85.1% uder the costat retur to scale (CRS), the VRS techical efficiecy score was 100%. This implies that uder VRS, the bak does ot have ay slacks sice it attaied relative efficiecy of 100% uder this sceario. Ay adjustmet to improve its techical efficiecy from 85.1% to 100% could have bee addressed from pure techical (maagerial expertise) ad techological iovatio as well as scale optimality. 92

7 Ecobak The bak scored 48.7% ad 82.3% CRS ad VRS respectively while operatig uder decreasig retur to scale. To attai the 100% techical efficiecy, the bak eeded to have improved by 21.56%, 152.9%, 93.48%, 215.6% respectively o its loas ad advaces, ivestmets, profit after tax ad Value added while the bak could have reduced its iputs by 1.18%, 25.4% ad % for fixed assets, operatig expeses ad umber of employees. First City Moumet Bak FCMB scored 41.6% ad 64% techical efficiecy uder CRS ad VRS respectively while operatig uder decreasig returs to scale. To attai the desired efficiecy target, the bak could have icreased its output by 61.2%, 84%, 258.4%, 56.36% respectively for loas ad advaces, ivestmets, profit after tax ad Value added while iputs could have bee improved by icreasig total customer deposits by 8.25%, ad reduce fixed assets by 8.78%. Fidelity Bak The bak scored 64.7% ad 79% uder CRs ad VRS respectively. For the bak to achieve the 100% techical efficiecy frotier, it could have improved o its output variables by 26.59, %, 97.27%, ad 62.31% respectively while icreasig total customer deposit by 7% but reducig umber of staff by 33.36% First Bak Although First Bak scored a techical efficiecy of 77.11% uder costat retur to scale (CRS) while the VRS techical efficiecy score was 100%. This implies that uder VRS, the bak does ot have ay slacks i its output ad iput variable sice it attaied relative efficiecy of 100% uder this sceario. Ay adjustmet to improve its techical efficiecy from 77.1 to 100% could have bee addressed from pure techical (maagerial expertise) ad techological iovatio as well as scale optimality. Guaraty Trust Bak GTB scored a techical efficiecy of 65.6% uder the costat retur to scale (CRS) while the VRS techical efficiecy score was 100%. This implies that uder VRS, the bak does ot have ay slacks i its output ad iput variables sice it attaied relative efficiecy of 100% uder this sceario. Ay adjustmet to improve its techical efficiecy from 65.6% to 100% could have bee addressed from pure techical (maagerial expertise) ad techological iovatio as well as scale optimality. Skye Bak The bak scored 50.3% ad 60.8% uder CRs ad VRS respectively. For the bak to achieve the 100% techical efficiecy frotier, it could have improved o its output variables by 64.47%, %, %, ad 82.75% respectively. O the iputs side, the bak could have reduced its operatioal expeses ad umber of employees by 19.23% ad 46.94% respectively. Stabic IBTC Bak The bak scored 100% techical efficiecy uder both CRS ad VRS. This implies that the bak was techically 100% relatively efficiet ad thus had zero slacks as it operated withi the best frotier ad thus meetig the desired target withi the idustry. Sterlig Bak The bak scored 100% techical efficiecy uder both CRS ad VRS implyig that the bak was techically 100% relatively efficiet ad thus had o output ad iput slacks as it operated withi the best frotier ad thus meetig the desired frotier withi the idustry i Nigeria. Uited Bak for Africa The bak scored a techical efficiecy of 74.5%uder the costat retur to scale (CRS) while the VRS techical efficiecy score was 100% implyig that uder VRS, the bak does ot have ay slacks i its output ad iput 93

8 variables sice it attaied relative efficiecy of 100%. Ay adjustmet to improve its techical efficiecy from 74.5 to 100% could have bee addressed from pure techical (maagerial expertise) ad techological iovatio as well as scale optimaility. Uio Bak Uio Bak scored a techical efficiecy of 40.3% uder CRS while the VRS techical efficiecy score was 100% implyig that uder VRS, the bak does ot have ay slacks i its output ad iput variables. Ay adjustmet to improve its techical efficiecy from 40.3% to 100% could have bee addressed from pure techical (maagerial expertise) ad techological iovatio as well as scale optimality. Uity Bak Uity Bak scored a techical efficiecy of 58% uder the CRS while the VRS techical efficiecy score was 60.8%. It could have improved o its output variables by 159.1%, 64.38%, %, ad 96.81% for loas ad advaces, ivestmets, profit after tax ad value added respectively. O the iputs side, the bak could have reduced its operatioal expeses ad umber of employees by 32.51%, 28.7% ad 69.71% respectively for total customer deposits, operatig expeses ad umber of employees. Wema Bak Wema Bak scored a techical efficiecy of 52% uder the CRS while the VRS techical efficiecy score was 93.6%. It could have improved o its output variables by 6.86%, 8.92%, 340.1%, ad 71.31% for loas ad advaces, ivestmets, profit after tax ad value added respectively. O the iputs side, the bak could have reduced its iputs by 17.40%, ad 64.15% respectively for operatig expeses ad umber of employees. Zeith Bak Zeith Bak scored a techical efficiecy of 61.7% uder the costat retur to scale (CRS) ad 100% score uder the VRS meaig that uder VRS, the bak does ot have ay slacks i its output ad iput variables sice it attaied relative techical efficiecy of 100% if it operates at costat retur to scale (CRS). Ay adjustmet to improve its techical efficiecy from 61.7% to 100% could have bee addressed from pure techical (maagerial expertise) ad techological iovatio as well as scale optimality. 5.0 Summary of Fidigs Based o the aalysis carried out i the study, it is revealed that most deposit moey baks operated below the 100% techical efficiecy frotier for various reasos. Oly two baks (Stabic ad Sterlig) out of the 15 baks covered i the study operated at 100% techical efficiecy level both at the VRS ad CRS measures of efficiecy. The two baks had zero slacks. The remaiig 13 baks operated below the efficiecy frotier. Of the 13 baks that operated below the efficiecy frotier, 6 baks had 100% techical efficiecy uder VRS but less tha 100% techical efficiecy uder the CRS. This implies that eve though the baks were able to obtai 100% techical efficiecy by correctly varyig the use of their iputs but fell below the relative efficiecy frotier due to iadequate maagerial or techological expertise eve though they had zero iput slacks i their operatios. The remaiig 7 baks operated below the relative efficiecy frotier. They were techically iefficiet uder the CRS as well as uder the VRS. This implies that they had iputs ad outputs slacks arisig from deficiecy i both maagerial, scale ad techological iovatios. 5.1 Coclusios ad Recommedatios The study examied the iput ad output slacks as a measure of relative techical efficiecy of deposit moey baks i Nigeria as well as to specifically provide empirical estimates o the relative improvemet eeded by the respective baks to achieve 100% techical efficiecy by reducig iputs wastages ad output shortfalls to zero. The study relied o the Slack-Based Methodology of Data Evelopmet Aalysis (SBM-DEA) to determie the relative techical efficiecy of the baks ad thereafter empirically determie the slacks of each bak durig the period 94

9 covered by the study. The study revealed that 8 baks had zero slacks if they operated uder variable retur to scale while the remaiig 7 baks had various levels of slacks bother the CRS ad VRS ad thus were less tha 100% techically efficiet. Out of the 8 baks that were techically 100% efficiet, 6 were less tha 100% techically efficiet uder CRS. Thus oly 2 baks were 100% techically efficiet uder the CRS ad VRS. The study recommeds the eed to operate at optimal scale, improvemet o the optimal combiatio of iputs as well as adoptig techological iovatios ad improvemet i maagerial efficiecy as measures to reduce the iputs ad output slacks that cotribute maily to baks operatig below the techical efficiecy frotiers i the bakig sector i Nigeria. Refereces Abraham. A. O & Oguiyi. L. T. (2010). Techical ad scale efficiecy of commercial baks i Nigeria. The IUP Joural of Applied Ecoomics, 9(4), Asekome M.O. (2014): Empirical aalysis of the techical efficiecy ad productivity chages i Nigeria commercial baks. A upublished Ph.D dissertatio, Departmet of Maagemet Scieces, Faculty of Social ad Maagemet Scieces, Uiversity of Bei, Nigeria. Asekome, M, O. & Aihie, J, A. (2014): Challeges of bakig sector reforms i Nigeria: A appraisal. Iteratioal Joural of Busiess ad Social Scieces. 5, 7(1), Cetre for promotig ideas, USA. Baker, R. D., Chares, A., & Cooper, A. A. (1984). Some models for estimatig techical ad scale efficiecies i data evelopmet aalysis. Maagemet Sciece, 9 (30), Berger, A. N. & Humphrey, D. B. (1997). Efficiecy of fiacial istitutios: iteratioal survey ad directios for further research. Europea Joural Operatioal Research, 98 (2), CBN (2009). Cetral Bak of Nigeria aual reports ad Statistics, 2009 CBN (2006). Cetral Bak of Nigeria aual Report ad statistics, 2006 Chares, A., Cooper, W.W. & Rhodes, E. (1978). Measurig the efficiecy of decisio makig uits. Europea Joural of Operatioal Research, 2 (1), Coelli, T., Rao, D. S. P., O Doell, C. J. & Battese, G. E. (2005). A itroductio to efficiecy ad productivity aalysis, 2 d editio. New York: Spriger. Edwards, F. (1977). Maagerial objectives i regulated idustries: expese preferece behaviour i bakig. Joural of political ecoomy. 85 (1), Hays, F. H, Lurgio, S. A. & Gibert, A. H. (2004). Efficiecy ratio ad commuity bak performace. Joural of Fiace ad Accoutacy, 5 (3), Fried, H., Lovell, C, A. K. ad Schmidt, S. E. (1994). The measuremet of productive efficiecy techique ad applicatio. Lodo Oxford Uiversity press Hauer, D. Peiris, S. J. (2005). Bak efficiecy ad competitio i low icome coutries: the case of Ugada. IMF workig paper 05/240. Isik, I. & K. Hassa, (2002). Techical, scale ad allocative efficiecies of Turkish bakig idustry. Joural of Bakig & Fiace, 26 (4), Muhammed, T. (2008). A DEA aalysis of bak performace i Nigeria. Muich Persoal RCP. Achieve MPRA paper No NDIC (2006); Nigeria Deposit isurace Corporatio aual reports ad accouts 95

10 Olaosebika, B. (2009). Surveyig efficiecies of Nigeria baks before ad after the miimum capital requiremet icreases. Hoors project, Illiois Wester Uiversity. Sobodu, B. & Akiode, J. (1998). Bak performace ad supervisio i Nigeria: Aalyzig the trasitio to a deregulated ecoomy. AERC Research Paper 71 Toe, K (2002). A slacks-based measure of supper efficiecy i data evelopmet aalysis. Europea Joural of operatioal research. 143,32-41 APPENDICES EFFICIENCY SCORES AND POTENTIAL IMPROVEMENTS FOR THE 7 BANKS THAT HAD INPUTS AND OUTPUT SLACKS Appedix I. Potetial Improvemets for Access Bak % % % % 0.00% % % % Appedix II. Potetial Improvemets for Eco Bak 96

11 900.00% % % % % % % % % 0.00% % Appedix III. Potetial Improvemets for FCMB Bak % % % 50.00% 0.00% % Appedix IV. Potetial Improvemets for Fidelity Bak 97

12 400.00% % % % % % % 50.00% 0.00% % Appedix V. Potetial Improvemets for Skye Bak % % % % % % % % 0.00% % Appedix VI. Potetial Improvemets for Uity Bak 98

13 350.00% % % % % % 50.00% 0.00% % % Appedix VII. Potetial Improvemets for Wema Bak 99