Banking efficiency in the Middle East : a survey and new results for the Jordanian banks

While research on the efficiency of the banking sector in Western economies has expanded rapidly over the past decade, relatively little work has been done on measuring efficiency of banks in the Middle East. One of the main reasons for this is that most of the Arab countries did not introduce financial and banking sector reforms until the 1990s. Until then, financial systems in most Middle East countries were heavily regulated and dominated by the public sector. However, over the past one and a half decades, the majority of Middle East countries have gradually moved towards more liberalised financial systems. This has created interest among policy makers, managers and economists to assess the efficiency of banks in many Middle East countries. In the Middle East economies, three types of banks operate simultaneously. They are conventional, Islamic and foreign banks, and they vary in terms of their size. The purpose of this paper is to provide a review of banking efficiency in the Middle East countries, with a detailed analysis of the banking efficiency in Jordan.