Abstract:

Over the years, the efficiency of deposit money banks has been examined using financial ratios such as return on assets, return on equity, profitability ratios among others as key performance indicators (KPIs). However, these KPIs do not interpret the true and fair view of the bank's efficiency and profitability because it fails to directly measure the managerial capacity of converting an organization's inputs into outputs in the same organization. This study examined the efficiency of the systematically important listed deposit money banks (DMBs) in Nigeria using total deposit, total asset, operating expenses for its inputs and net interest income, l& advances, and gross earnings for its output. The study used the summed data from the annual published financial statement of all the listed systemically important deposit money banks in Nigeria for the corresponding years spanning from 2009-2019. The study found that Access bank, and guaranty trust bank were technically efficient at both the input and output constant return to scale (CRS) and (VRS), while Zenith bank was inefficient at the input oriented variable return to scale with an efficiency score of 0.933103, United bank for Africa was inefficient at the input oriented variable return to scale and constant return to scale with the corresponding efficiency score of 0.806496 and 0.789307, respectively. The study concluded that big or large financial disclosures accrued to financial institutions does not secure its improved efficiency level which could metamorphose into financial stability, the study further recommended that huge total asset is not directly proportional to an efficient financial institution; therefore, bank management should introduce cost effective and efficient strategies as part of their strategic decisions and regulatory assessments should not be solely carried out by inferring on their financial figures, other key categorical examples which involves inputs such as number of employees and outputs such as number of hours worked should also be used in evaluating DMBs performance.