Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
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Performance Evaluation of SME Banking in Bangladesh using Stochastic Frontier Analysis

  • Hossain, M.K. (Daffodil International University) ;
  • Hossain, M.A. (Bangladesh Bank) ;
  • Baten, M.A. (School of Physical Sciences, Shahjalal University of Science and Technology)
  • Received : 2016.05.31
  • Accepted : 2016.06.20
  • Published : 2016.06.30
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Abstract

Small and Medium Enterprises (SMEs) are suitable to provide employment with lower investment in densely populated countries like Bangladesh. A stochastic frontier model is used to evaluate performance of SME Banking of the commercial banks in Bangladesh. Input (Total Deposit, Cost of Fund and Salary Expenditure) and output (Finance to SME) data are collected on 45 banks which are dealt with SME for 13 quarters from $1^{st}$quarter of 2010 to $2^{nd}$quarter of 2013. Average performance of the SME banking is 0.716 in Bangladesh. That is, banks have opportunity to increase 30% performance in SME banking from the same inputs. Bangladesh Development Bank has lowest performance (0.540) while Eastern bank has the highest performance (0.753). Highest (0.743) and lowest (0.662) performance is observed during the second quarter of 2013 and fourth quarter of 2010 respectively. Inefficient Bank might be benefited by following the rules of efficient banks.

Keywords

References

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