Relative Technical Efficiency in Angolan Commercial Banking: A Diagnosis Using DEA-CRS/VRS Approach and Heat Maps

Abstract

Objective: This study evaluates the relative technical efficiency of twenty-one Angolan commercial banks in 2024, using input-oriented DEA-CRS/VRS models and heatmaps for visual diagnosis of operational slack. Method: The evaluation was carried out following a financial intermediation approach, using DEA modeling, considering customer deposits, fixed assets, and personnel costs as inputs, and loans and non-interest operating income as outputs. Results: The main findings indicate that only four banks were efficient under constant returns to scale (CRS), while nine stood out under variable returns to scale (VRS). The average total technical efficiency was 66% and the pure technical efficiency was 78%, revealing widespread inefficiencies in the sector. More than half of the banks operated with increasing returns to scale, suggesting potential for expansion through operational restructuring. BOCLD bank stood out as a replicable benchmark, especially for institutions with critical performance. The most efficiency-sensitive variable was customer deposit management. Conclusions: The results obtained will only find a more complete explanation through a methodological extension of the study, with the incorporation of qualitative dimensions into the analysis, aiming to support more robust management and operational expansion strategies. The findings offer support for strategic decisions in Angolan banking, focusing on efficiency, scale, and replication of good management practices.practices.