Non-traditional banking activities impact efficiency of banks in Sri Lanka.
The study looked at how non-traditional activities impact the efficiency of banks in Sri Lanka. They used data from important banks in Sri Lanka from 2009 to 2019 and analyzed it using Stochastic Frontier Analysis. The results showed that banks' profit efficiency decreased when they engaged in non-traditional activities, but their cost efficiency increased. Technology development affected profit inefficiency, while ATM development affected cost inefficiency. Ownership status did not impact efficiency. This study is important because it shows how including non-interest income can affect a bank's performance in terms of profit and cost efficiencies.