Modeling the competitive market efficiency of Egyptian companies: A probabilistic neural network analysis

Understanding efficiency levels is crucial for understanding the competitive structure of a market and/or segments of a market. This study uses two artificial neural networks (NN) and a traditional statistical classification method to classify the relative efficiency of top listed Egyptian companies. Accuracy indices derived from the application of a non-parametric data envelopment analysis approach are used to assess the classification accuracy of the models. Results indicate that the NN models are superior to the traditional statistical methods. The study shows that the NN models have a great potential for the classification of companies’ relative efficiency due to their robustness and flexibility of modeling algorithms. The implications of these results for potential efficiency programs are discussed.