The Impact of International Financial Crisis on the Efficiency of Omani Banks’ Performance: An Empirical Study

Abstract

Although, there is huge number of published researches in banking efficiency, little effort has been undertaken to study the impact of financial crisis on banking performance in Oman. In view of this, the main purpose of this paper is to illustrate, using empirical evidence, the extent to which the recent international financial crisis had an impact on the financial performance of the banking sector in Oman. In other words, the main question this paper aims to answer is; what extent the international financial crisis has an impact on the efficiency of Omani banks’ performance. The data used to answer this question includes all relevant statistics related to Omani commercial banks. A number of financial measures are used to compare the statistics for each bank before (three years; namely; 2005, 2006 and 2007) and after (three years; namely; 2009, 2010 and 2011) the financial crisis to find out the impact of the financial crisis on the efficiency of the Omani banks’ performance. A simple t-test of the difference between means is conducted to check whether there is a significant difference in banks’ performance before and after the crisis. Overall, the results show that the effect of international financial crisis on the Omani banks’ has not been significant. Instead; the analysis reveals there is a statistically insignificant improvement in the efficiency of Omani banks’ performance following international financial crisis. Furthermore; the paper shows that the local commercial banks have a high degree of resilience and stability.