A Survey and Measuring Efficiency Level in the Country\ s Banking System, and the Effective Factors

Human being always wants to be more efficient in order to achieve more profit or welfare. In economic point of view, efficiency means optimize allocation of resources and maximize use of resources with minimum cost in a given technology. Nowadays, efficiency calculation in organizations or in different industries is a necessary step for comparing the level of competition in domestic and foreign environment of a country. So, the banking system is not an exception. For this reason, calculating the efficiency level of the banks and knowing the effective factors are very important. At first, we look at literature about efficiency and then we try to find how to calculate it and how to compare the efficiency indices in the banking system which affect them. In continuation, we calculate the efficiency level in the banking system of Iran, then with the data from fourteen banks during the years (1996-2003), we evaluate the effectiveness of operational and structural variables on the performance of the banking system, in Iran.