Estimation of : Efficiency , Scale & Scope and Productivity Measures of UAE Banks

This study estimated cost inefficiency, scale & scope measures and cost productivity growth rates of banks in United Arab Emirates during 1998 (a bad year for banks due to lower oil price) and 2000 (a good year for banks as the oil prices were higher). The study provided evidence that: Substantial cost X-inefficiencies and scope economies existed in UAE banks. Average small banks improved their scale economies in 2000, while large banks maintained constant returns to scale than in 1998. Cost productivity rate of average banks increased by 24% (when compared to the best-practicing banks). Key terms: UAE Banks, Cost inefficiency, Scale and Scope estimates, Cost Productivity growth rate, Foreign Investment. JEL Classification: G21, L25 1 The paper was presented at the European Conference of Financial Management Association International (FMAI – USA), in Copenhagen, Denmark on 6 June 2002. The author acknowledges the valuable comments provided by the participants at the FMAI conference. The author also acknowledges the encouragement and support given by the University through granting release time for the current research.