Abstract:
Increased competition and globalization have made it imperative for banks to achieve high efficiency in
order to generate required returns. This paper investigates the relationship between bank efficiency
estimates, derived from both Stochastic Frontier Approach (SFA) and Data Envelopment Analysis (DEA)
and share prices of banks listed on the Ghana stock exchange. The results give an indication that
changes in cost and profit efficiency are reflected in stock performance and that efficiency is directly
observed by the public and reflected in share prices, though SFA efficiency scores are not reflected in
share prices as being equally important as compared to DEA efficiency scores.
