African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4199

Full Length Research Paper

The impact of bank efficiency on share performance: Evidence from Pakistan

Muhammad Aftab1*, Sajjad Ahamad2, Wasim Ullah3 and Rauf A. Sheikh4
1Department of Management Sciences, Faculty of Management Sciences, COMSATS Institute of Information Technology Islamabad, International Islamic University Islamabad, Pakistan. 2Faculty of Management sciences, International Islamic University Islamabad, SME Bank Ltd, Pakistan. 3National Bank of Pakistan. 4Faculty of Management sciences, International Islamic University Islamabad, Pakistan.
Email: [email protected]

  •  Accepted: 22 February 2011
  •  Published: 18 May 2011

Abstract

This study examines the relationship between bank efficiency and share performance. Data regarding seven banks listed on Karachi Stock Exchange were collected for a period of five years (2003 to 2007). Data analysis comprises three steps. Firstly, cumulative annual share returns (CASR) is calculated, secondly, Data Envelopment Analysis (DEA) is used to measure bank efficiency and finally, share performance is regressed over change in efficiency. The results reveal that, a positive and significant link exists between change in annual bank efficiency and share performance.

 

Key words: Bank efficiency, share performance, data envelopment analysis, Pareto optimality, KSE, Pakistan.