Bangladeshi banking sector at risk due to low cost efficiency.
The banking sector in Bangladesh is a crucial part of the country's financial system, but it faces challenges like supervision gaps and market distortions. To understand how well banks are performing, researchers used a method called stochastic frontier analysis to measure cost efficiency from 2011 to 2015. They found that, on average, Bangladeshi banks are about 88.50% efficient in managing costs. State-owned banks were less efficient compared to private and Islamic banks. The study also showed that technological progress in the sector was limited during the period, and non-performing loans had a big impact on reducing overall efficiency.