Universal Journal of Accounting and Finance Vol. 2(5), pp. 121 - 128
DOI: 10.13189/ujaf.2014.050201
Reprint (PDF) (321Kb)

Does Operating Efficiency Matter for the Returns of Banking Sector Stocks in Dhaka Stock Exchange?

Mohammad Akter Hossan ^1,*, Mohammad Ziaul Hoque ¹, Bishajit Dey ^2
1 Department of Finance and Banking, University of Chittagong
² Dutch Bangla Bank Ltd, Bangladesh

ABSTRACT

This study examines effect of operating efficiency on the returns of portfolios that are constructed for the banking sector stocks of Dhaka Stock Exchange of Bangladesh. For this purpose, this study firstly measures operating efficiency of the sample banks applying Data Envelopment Analysis (hereafter DEA) techniques. Secondly, sample banks are grouped into efficient and inefficient portfolios on the basis of these efficiency scores. Thirdly, Mann Whitney – U test is applied to test the alternative hypothesis that return of efficient portfolio is significantly different from the same of inefficient portfolio. Results of Mann Whitney – U test reject the alternative hypothesis. Therefore, this study observes no significant difference between returns of operationally efficient and inefficient portfolios in Dhaka Stock Exchange. Results of this study also find that inefficient use of inputs and unfavorable financial environment are the reasons of observing no significant difference between returns of portfolios.

KEYWORDS
DEA, Input - output, Banks, Efficient and Inefficient Portfolios

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Mohammad Akter Hossan , Mohammad Ziaul Hoque , Bishajit Dey , "Does Operating Efficiency Matter for the Returns of Banking Sector Stocks in Dhaka Stock Exchange?," Universal Journal of Accounting and Finance, Vol. 2, No. 5, pp. 121 - 128, 2014. DOI: 10.13189/ujaf.2014.050201.

(b). APA Format:
Mohammad Akter Hossan , Mohammad Ziaul Hoque , Bishajit Dey (2014). Does Operating Efficiency Matter for the Returns of Banking Sector Stocks in Dhaka Stock Exchange?. Universal Journal of Accounting and Finance, 2(5), 121 - 128. DOI: 10.13189/ujaf.2014.050201.