Abstract

In this paper the data envelopment analysis techniques of both input- and output-orientations was used under the assumption of constant return to scale (CRS) and variable returns of scale (VRS) to investigate both the technical efficiency and the scale efficiency of the Saudi banking sector during the period 2013-2017. Each bank is a DMU that carries multiple inputs to produce multiple outputs. Thus, the relative efficiency of each unit is determined by comparing its multiple inputs and multiple outputs. The study included the use of two inputs: shareholders' equity, deposits and two outputs: loans and total assets. The study reached a number of results, namely, there is a surplus of resources available at the banks of the study which is inefficient, which means that the resources of these banks exceed their use, which shows the need to increase investment banking with Saudi banks so that they can achieve full efficiency relative, where the study found that Saudi British Bank, Arab National Bank, Alinma Bank and Bank Al Jazira achieved the highest levels of relative efficiency, demonstrating their ability to optimize the use of available resources. On the other hand, Samba Financial Group, Riyad Bank, Alawwal Bank, Al Rajhi Bank, Investment Bank and Banque Saudi Fransi can achieve full comparative efficiency when lowering their inputs. While The National Commercial Bank and Bank AlBilad can achieve full comparative efficiency when reducing their outputs and inputs.