“This paper measures the efficiency of WAEMU banks and its determining factors, after the banking system reforms from 1993 to 1996. Data envelopment analysis (DEA) was used for assessing technical efficiency and a stochastic frontier analysis (SFA) for cost
efficiency. Results suggest similar evolutions for the two types of efficiency for all WAEMU countries except Côte d’Ivoire and Burkina Faso. A detailed analysis per banking shareholder’s equity group reveals that local private banks are the most efficient ones, followed by foreign and then state-owned banks. Despite the technological changes that occurred in the banking system, the Malmquist index shows that the increase of technical efficiency is much more a factor of scale efficiency change than of the incorporation of technological innovations. Lastly, WAEMU banks’ efficiency is sensitive to variables like financial soundness, the ratio of bad loans per country, the banking concentration and the GDP per capita.”
