The Efficiency of Libyan Commercial Banks in the Context of Libya’s World Trade Organisation Accession<br />Paper Presente...
2<br />Outline of the presentation <br /><ul><li> Aim of the study
WTO and Libyan Banking Sector
The Main Characteristics of the Libyan Banking Sector
The Reasons of Libya’s Joining the WTO?
Literature Review
Methodology of Study
Results
Expected Contribution to  Knowledge</li></li></ul><li>Aim of the study<br /><ul><li>The study aims to examine the current ...
WTO and Libyan Banking Sector <br /><ul><li>The WTO is an organisation that aims to liberalise and increase international ...
Libya has become an observer in the WTO since 2004 and will continue to be so during the negotiation leading to full membe...
According to WTO rules, Libya had to start accession negotiations within five years from this date. However, Libya has not...
The Reasons for Libya’s Joining the WTO<br /><ul><li>To further integrate into the world economy.
To get more predictable access for its exports to foreign markets and attract more foreign direct investment.
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The Efficiency of Libyan Commercial Banks in the Context of Libya’s World Trade Organisation Accession

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Saleh Abida's presentation at SPARC (Salford Postgraduate Annual Research Conference), 10 - 11 June 2010 at the University of Salford.

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  • As it known there was sanctions on Libyan economy in the past 2. especially in non-oil sector
  • The Efficiency of Libyan Commercial Banks in the Context of Libya’s World Trade Organisation Accession

    1. 1. The Efficiency of Libyan Commercial Banks in the Context of Libya’s World Trade Organisation Accession<br />Paper Presented by Saleh .R. Abida at SPARC, 10-11 June 2010<br />© rests with the author. Please cite appropriately<br />1<br />
    2. 2. 2<br />Outline of the presentation <br /><ul><li> Aim of the study
    3. 3. WTO and Libyan Banking Sector
    4. 4. The Main Characteristics of the Libyan Banking Sector
    5. 5. The Reasons of Libya’s Joining the WTO?
    6. 6. Literature Review
    7. 7. Methodology of Study
    8. 8. Results
    9. 9. Expected Contribution to Knowledge</li></li></ul><li>Aim of the study<br /><ul><li>The study aims to examine the current state of banking system in Libya, and how it is being influenced by Libya’s WTO expected membership. To achieve the aim of the study of the study, the efficiency of Libyan banks was measured and compared to similar countries are already members of the WTO (Gulf Cooperation Countries ( GCC countries).</li></ul>3<br />
    10. 10. WTO and Libyan Banking Sector <br /><ul><li>The WTO is an organisation that aims to liberalise and increase international trade in goods and services by promoting lower trade barriers.
    11. 11. Libya has become an observer in the WTO since 2004 and will continue to be so during the negotiation leading to full membership.
    12. 12. According to WTO rules, Libya had to start accession negotiations within five years from this date. However, Libya has not submitted a memorandum on the foreign trade regime, therefore, the working party has not met yet.</li></ul>4<br />
    13. 13. The Reasons for Libya’s Joining the WTO<br /><ul><li>To further integrate into the world economy.
    14. 14. To get more predictable access for its exports to foreign markets and attract more foreign direct investment.
    15. 15. Keen on expanding the service sector and banking sector (suffering from Overstaffing problem and low productivity).</li></ul>5<br />
    16. 16. The Main Characteristics of the Libyan Banking Sector<br /><ul><li>It represents thebackbone of the Libyan financial sector.
    17. 17. All the financial activities in Libya are under the control of Central Bank of Libya (CBL).
    18. 18. It is described as backward sector and it exists in a relative capital-abundant economy, where the number of institutions is small by international standards and they have traditionally been over-protected by the government.
    19. 19. corruption and lack of transparency and accountability.
    20. 20. Highly concentrated sector.
    21. 21. heavy burden of non-performing loans (NPLs). It represented around 25% of total loans</li></ul>6<br />
    22. 22. Literature Review <br /><ul><li>The Potential Effects of WTO on Libyan Financial </li></ul> Sector (Abida and Fayad, 2003). <br /><ul><li>The Status of Reforms of the Banking Sector in Arab Countries(Abou Ali, 2000).
    23. 23. The GATS Agreement and Liberalising the Kuwait Banking Sector </li></ul>(Jabsheh, 2002). <br /><ul><li> The implication of the general agreement on trade in services (GATS) for</li></ul>banks in the GCC region (Victor Murinde and Cillian Ryan, 2002).<br />7<br />
    24. 24. 8<br />Methodology of Study<br /><ul><li>Data Envelopment Analysis DEA was used to asses the efficiency of 63 banks during the period from 1999 to 2007 from Libya and GCC countries. The DEA is a non-parametric mathematical technique widely used to calculate the efficiency of banks.
    25. 25. The main reasons for using this approach, rather than a parametric approach, is that it was originally developed to measure efficiency in the public sector rather than private sector also it is suitable for small samples and fewer assumptions.
    26. 26. Data used in this study are collected from balance sheets and income statements of banks, their web pages in the internet, annual central banks reports and also from the Bankscope database.
    27. 27. The interest and non interest expense were used as inputs and interest and net interest income were used as outputs.
    28. 28. How the efficiency of Libya and GCC countries compared?</li></ul>1- comparisons of bank efficiencies in different nations based on the use of a common efficient frontier (CEF), <br />2- comparisons of bank efficiencies in different nations using nation-specific frontiers (NSF).<br />
    29. 29. Methodology of Study <br /><ul><li>Technical efficiency (TE) (Constant return to scale CRS scores)</li></ul> The assumption(CRS) is a common assumption in DEA analysis. It is only valid when all decision making units (DMUs) or banks are operating at optimal scale. The (CRS) is more suitable with small samples. It compares each unit against all other units.<br /><ul><li>Pure technical efficiency (P.T.E): (Variable return to scale scores):</li></ul> banks may not be operating at optimal scale since factors like imperfect competition, constrains to finance, exist. The alternative assumption, variable returns to scale, compares each unit only against other units of similar size, instead of against all other units. As such, an assumption of variable returns to scale is more suitable for large samples. These two assumptions have been used in this study to benefit from the advantages of each one. <br /><ul><li>Scale efficiency:</li></ul>This measures the proportional reduction in input usage that is achieved if the bank is operating at constant returns to scale. For constant returns to scale the value SE equals 1, and all values less than 1 reflect scale inefficiency<br />9<br />
    30. 30. Results<br />10<br />
    31. 31. 11<br />Results<br />
    32. 32. 12<br />Results<br />
    33. 33. 13<br />Expected Contribution to Knowledge<br /><ul><li>To the best of the researcher’s knowledge, there are no previous studies aimed toassess the expected effects of the WTO on Libyan banking sector, this study will try to fill a gap in the knowledge in this area specifically.
    34. 34. Studying the impacts of the WTO on Libyan banking sector after the adoption of new Banking Law is a new area of research. The new banking law aimed to reform the banking sector and became effective in January 2005.</li></li></ul><li>14<br />Any Questions ? <br />

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