Abstract:
Theoretical predictions concerning the ownership-performance relationship
remain ambiguous. Despite substantial changes in ownership in the Sri Lankan banking
system less has been done to analyze performance differences amongst various
ownership groups. Drawing upon the experience of the Sri Lankan banking system
during the period 2000-2007, this study first provides quantitative estimates of revenuebased
performance using Data Envelopment Analysis (DEA). Secondly, it evaluates the
influence of ownership on performance using regression techniques. The study finds
strong evidence to suggest that foreign banks perform better than domestic banks.
Moreover, the evidence suggests that state-owned banks perform better than domestic
private banks though this evidence is weak. Furthermore, all domestic banks have
experienced substantial performance gains in recent years. The findings of the study
imply that promotion of foreign bank ownership and creation of public confidence with
regard to the credibility of private and foreign banks can be employed as important
policy measures to enhance performance.
