Measuring Efficiency of Sepah Bank Branches and Determining Ineffciency Factors

The present research is seeking to assess the technical efficiency of Bank Sepah branches (in Tehran province) and to identify the factors which exert influence on it. Data over the period 2005-2007 relating to 52 different branches of Tehran province sepah Bank. In order to do this، the estimated stochastic cost function with the use of Maximum Likelihood (ML) method has been exercised in this research. The models which have been used in this research are as follows: inefficiency of the variant with time by Battese and Coelli (1992) and inefficiency of structural effects by Battese and Coelli (1995). In the cost function، the elements of assessment are the amount of facilities given to the private sector as the output and labor force، the amount of investment and interest-free deposits and fixed assets as the input. The results obtained from the first model، that is the inefficiency of variant with time، indicate that the Bank Sepah branches have not given facilities with the least cost، considering the main thesis of research. The average efficiency of branches has been 77. 1 percents in the first model and the efficiency of branches has been decreased throughout the time. The results of the second model have shown structural effects and the average efficiency of branches has been 64. 2 percents. The reason for the difference between the first and second models has been the influence of structural variants of the branches (economic size، the ratio of fixed assets to total assets، employees’ education، level of mechanization).