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Performance of Financial Institutions in Bhutan

Discussion Papers


by Dil Bahadur Rahut, Iván Velásquez Castellanos, Pravakar Sahoo
September 2010


The Kingdom of Bhutan is a small landlocked country in South Asia, located in the eastern Himalayas, and bordered by India and China. Bhutan is a small and fragile economy with a population of about 687,000. Nevertheless, its banking system plays an essential role in the growth and development of the country. This paper analyzes the financial performance, the development and growth of bank and non-bank financial institutions of Bhutan for the period 1999-2008 using both traditional and data envelopment analysis (DEA). The DEA analysis shows that financial institutions in are efficient and Bhutan National Bank has been the most efficient one. Overall, the paper finds that the ROE of the financial institutions in Bhutan are comparable to the international banks.

Keywords: Financial institution, performance, loan, deposit, net income, Bhutan.
JEL classification: G20; G21; G28; O16

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