Bank’s Efficiency and Economic Growth: Evidence from SENA

A non-parametric technique, data envelopment analysis (DEA) and Generalized Method of Moments (GMM) for data from 1998 to 2023 to investigate the banks’ cost and profit efficiency and examine the influence of ownership, bank profile, size, and corporate structure on bank efficiency and causality between bank efficiency and economic growth for 75 commercial banks in Africa big economies, South Africa, Egypt, Nigeria and Algeria (SENA). The overall results show that commercial banks in SENA are relative more cost efficiency than profit efficiency which is consistent with other studies. Domestic banks appear to be more cost and profit efficiency than foreign banks. There are no significant differences between new and old banks in cost efficiency, while old banks found to be more profit efficiency compared with new banks. Big banks found to be more cost efficiency compared with small banks which are more profit efficiency. Unlisted banks appear to be more cost and profit efficiency than listed banks. On causality between commercial banks efficiency and economic growth, the finding show that neither cost efficiency nor profit efficiency has a Granger cause on economic growth. However, there is one-way causality between cost efficiency and profit efficiency that runs from cost to profit efficiency.