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Introduction

From the early 1990s, the financial sector of Bangladesh has undergone a lot of reform measures: deregulation of administered interest rate regime, moving out subsidies from the banking system to the budget etc. Allowing more commercial banks under private ownerships and deepening of the financial system through the participation of broad based non-bank financial institutions are also remarkable events in the financial systems of Bangladesh in the last two decades. Considering the past and recent banking sector performance and the both inside & outside competitive environment, the dissertation paper aims to analyze the performance measurements of the commercial banks of Bangladesh and the degree of competition among the banks. On the basis of the findings, the paper also focuses the wave of further privatization of state-owned banks with recommendations since the government of Bangladesh is in a state of divesting more state banks to the private hands.

Examining and measuring the banking sector efficiency & performance has been a common issue to the researchers over the years due to the ever changing environment of the banking business. According to Berger et. al (1993), keeping other things remain same, the more efficient financial institutions should exhibit a greater safe and sound banking business. One of the major functions of the banks to perform as an intermediary role: between the savers and borrowers. Inefficiency in the operation of a firm means that the firms are not capable of producing feasible level of output with the resources employed (Wheelock & Wilson, 1995). Banks are not exceptions from such operations.

There are two main approaches of efficiency analysis: parametric and non-parametric approach. In the recent times Data Envelopment Analysis (DEA), a non-parametric approach, has been gaining the popularity for measuring the efficiency and productivity of the production based decision making units (DMUs). Data...