ARTICLE

ECONOMIES OF SCALE AND EFFICIENCY OF MUTUAL FUNDS IN PAKISTAN

  1. HOME
  2. ARTICLE

11 Pages : 96-103

http://dx.doi.org/10.31703/grr.2019(IV-I).11      10.31703/grr.2019(IV-I).11      Published : Mar 2019

Economies of Scale and Efficiency of Mutual Funds in Pakistan

Abstract

    Mutual funds have a significant role as an institutional investor to allocate funds in an efficient way. Therefore, this study examines efficiency of mutual funds due to their substantial role in the growth of economy. Technical Efficiency (TE), Pure Technical Efficiency (PTE), and Scale Efficiency (SE) of mutual funds are examined over the period of 2011 to 2016 by following Data Envelopment Analysis (DEA). The results showed a TE of 70.6%, PTE of 73%, and SE of 96.3% in mutual funds of Pakistan. A significant boost has been noticed in the efficiency of the initial year but it decreased afterward. Decreasing return to scale is found 52.40% whereas, increasing return to scale are found 17.41%. There were only 30.19% mutual funds which are working on right scale. It suggests that regulators need to closely monitor mutual funds since unplanned growth in size of mutual funds will damage the overall efficiency since the decreasing return to scale are found highest in percentage.

    Efficiency, Data Envelopment Analysis, Mutual Funds, Pakistan

    (1) Muhammad Jam e Kausar Ali Asghar
    Assistant Professor,Department of Management Sciences,University of South Asia, Lahore, Punjab, Pakistan.
    (2) Abdul Zahid Khan
    Assistant Professor,Department of Technology Management, International Islamic University Islamabad, Pakistan.
    (3) Hafiz Ghufran Ali Khan
    Assistant Professor,Department of Management Sciences,International Islamic University Islamabad, Pakistan.
Fulltext PDF

References

  • Afshan, N. (2013). Performance Evaluation of Mutual Funds in India: DEA Approach. Romanian Review of Social Sciences, 5, 46-56
  • Afza, T., & Jam-e-kausar (2010). Firm Size and Efficiency in the Non-Life Insurers of Pakistan. Journal of Quality and Technology Management, 4(2), 168-173.
  • Alexakis, P., & Tsolas, I. (2011). Appraisal of Mutual Equity Fund Performance Using Data Envelopment Analysis. Multinational Finance Journal, 15(3/4), 273-296.
  • Asghar, M. J. K., Afza, T., & Bodla, M. A. (2013). The efficiency of the Mutual Funds in Pakistan. Middle-East Journal of Scientific Research, 18(8), 1055-1064.
  • Ayadi, M. A., Ben Ghazi, Z., & Chabchoub, H. (2015). Canadian Socially Responsible Investment Mutual Funds Performance Evaluation Using Data Envelopment Analysis. Multiple Criteria Decision Making in Finance, Insurance and Investment, 77-133.
  • Bangash, R., A. Hussain & M. H. Azhar (2018). Performance Evaluation of Mutual Funds: A Data Envelopment Analysis. Global Social Sciences Review, 3(2), 212-236.
  • Barrientos, A., & Boussofiane, A. (2005). How Efficient are Pension Fund Managers in Chile? Revista de Economia Contemporânea, 9(2), 289-301.
  • Charnes, W.W. Cooper, E. Rhodes (1978). Measuring the Efficiency of Decision Making Units. European Journal of Operational Research, 2, 429-444.
  • Cullinan, C., & Zheng, X. (2012). Asset Liquidity and Mutual Fund Management Fees: Evidence from ClosedEnd Mutual Funds. Accounting and Finance Research, 1(2), 139-147.
  • García, J. V., Vidal, M., Boubaker, S., & Hassan, M. (2016). The Efficiency of Mutual Funds. Annals of Operation Research, Forthcoming, 1-42.
  • Gardijan, M., & KriÅ¡to, J. (2017). Efficiency of Mutual Funds in Croatia: a DEA-based Approach Applied in the Pre-crisis, Crisis and Post-crisis Period. Croatian Operational Research Review, 8(1), 77-92.
  • Hendrawan, R., & Aji Sumantri, M. B. (2013). Efficiency of Indonesia's Mutual Funds During 2007-2011 By Using Data Envelopment Analysis (DEA). Jurnal Keuangan dan Perbankan, 17(1), 99-110.
  • Mansor, F., Bhatti, M., & Ariff, M. (2015). New evidence on the impact of fees on mutual fund performance of two types of funds. Journal of International Financial Markets, Institutions and Money, 35, 102-115.
  • Qamruzzaman, Md. (2014). Comparative Study on Performance Evaluation of Mutual Fund Schemes in Bangladesh: An Analysis of Monthly Returns. Journal of Business Studies Quarterly, 5(4), 190-209.
  • Tavakoli, M. R., & Houshyar, A. N. (2014). Productivity and Efficiency Evaluation of US Mutual Funds. Journal of Economics and Finance, 64(2), 120-143.

Cite this article

APA

    APA : Asghar, M. J. e. K. A., Khan, A. Z., & Khan, H. G. A. (2019). Economies of Scale and Efficiency of Mutual Funds in Pakistan. Global Regional Review, IV(I), 96-103. https://doi.org/10.31703/grr.2019(IV-I).11

CHICAGO

    CHICAGO : Asghar, Muhammad Jam e Kausar Ali, Abdul Zahid Khan, and Hafiz Ghufran Ali Khan. 2019. "Economies of Scale and Efficiency of Mutual Funds in Pakistan." Global Regional Review, IV (I): 96-103 doi: 10.31703/grr.2019(IV-I).11

HARVARD

    HARVARD : ASGHAR, M. J. E. K. A., KHAN, A. Z. & KHAN, H. G. A. 2019. Economies of Scale and Efficiency of Mutual Funds in Pakistan. Global Regional Review, IV, 96-103.

MHRA

    MHRA : Asghar, Muhammad Jam e Kausar Ali, Abdul Zahid Khan, and Hafiz Ghufran Ali Khan. 2019. "Economies of Scale and Efficiency of Mutual Funds in Pakistan." Global Regional Review, IV: 96-103

MLA

    MLA : Asghar, Muhammad Jam e Kausar Ali, Abdul Zahid Khan, and Hafiz Ghufran Ali Khan. "Economies of Scale and Efficiency of Mutual Funds in Pakistan." Global Regional Review, IV.I (2019): 96-103 Print.

OXFORD

    OXFORD : Asghar, Muhammad Jam e Kausar Ali, Khan, Abdul Zahid, and Khan, Hafiz Ghufran Ali (2019), "Economies of Scale and Efficiency of Mutual Funds in Pakistan", Global Regional Review, IV (I), 96-103

TURABIAN

    TURABIAN : Asghar, Muhammad Jam e Kausar Ali, Abdul Zahid Khan, and Hafiz Ghufran Ali Khan. "Economies of Scale and Efficiency of Mutual Funds in Pakistan." Global Regional Review IV, no. I (2019): 96-103. https://doi.org/10.31703/grr.2019(IV-I).11