The impact of bank efficiency on share performance: Evidence from Pakistan

This study examines the relationship between bank efficiency and share performance. Data regarding seven banks listed on Karachi Stock Exchange were collected for a period of five years (2003 to 2007). Data analysis comprises three steps. Firstly, cumulative annual share returns (CASR) is calculated, secondly, Data Envelopment Analysis (DEA) is used to measure bank efficiency and finally, share performance is regressed over change in efficiency. The results reveal that, a positive and significant link exists between change in annual bank efficiency and share performance.