FINANCIAL INCLUSION AND BANK EFFICIENCY IN THAILAND: EVIDENCE FROM A TWO-STAGE DEA APPROACH
DOI:
https://doi.org/10.35631/AIJBES.829134Keywords:
Bank Efficiency, Data Envelopment Analysis, Digital Payments, Financial Inclusion, Thailand, Two-Stage DEAAbstract
This study examines the relationship between financial inclusion and bank efficiency in Thailand during 2013-2021, a period marked by high levels of formal financial access and rapid growth in digital financial services. Bank efficiency is estimated using an input-oriented Data Envelopment Analysis (DEA), with technical efficiency (TE) decomposed into pure technical efficiency (PTE) and scale efficiency (SE). The Thai sample consists of 211 bank-year observations from 26 commercial banks and foreign-bank branches. A broader ASEAN-6 panel of 1,500 bank-year observations is used to construct the efficiency frontier and support the second-stage estimation of Thailand-specific associations. The average annual efficiency scores are 0.599 for TE, 0.682 for PTE and 0.867 for SE, suggesting that inefficiency is more closely related to managerial and operational factors than to scale. The second-stage results show that the relationship between financial inclusion and efficiency varies across indicators. ATM density is statistically insignificant, while branch density per 1,000 km² is positively associated with efficiency. In contrast, deposit accounts, credit cards and outstanding deposits are negatively associated with efficiency. These findings suggest that, in a relatively mature financial system, expanding access alone may not necessarily generate additional efficiency gains. Greater attention may instead be needed on active financial-service usage, efficient delivery channels and the productive deployment of bank funding.
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