Evaluating the efficiency of the banking sector in Kuwait

Abstract EN

-Finance and insurance is a leading economic sector in the State of Kuwait.

In 2009 it represented 18.7% of total GDP and 51.1% of private sector GDP.

This paper focuses on issues related to the efficiency of this sector.

Recently IMF published macroeconomic assessment of Kuwaiti financial sector, the stability and stress tests indicate that the overall figure is positive and the financial system is resilient.

This paper derived the relative technical and cost efficiency scores by implementing DEA on a panel of 15 banks over the period 2006 - 2009.

Total efficiency score of banking sector in State of Kuwait increased steadily from 57% in 1996 to 77% in 2009.

The scores are close to world means (86%), and very high if compared to many other countries.

However, there’s a need for the banking sector to further improve efficiency in order to achieve world best practices.

The government also needs to assist banks by creating appropriate policy environment that promotes efficiency