HAVE NEW ZEALAND BANKS REALLY BECOME MORE EFFICIENT? David Tripe Centre for Banking Studies Massey University Palmerston North Phone: +64 6 350-5799 ext 2337 Fax: +64 6 350-5651 Draft version : December 2001 Abstract: This paper explores the extent of efficiency improvements achieved by New Zealand banks over the period 1996 to 2001, using data envelopment analysis (DEA), on a time-series, rather than cross-sectional basis. The paper identifies a number of issues that arise with use of DEA, including that approximately 60% of the apparent improvement in efficiency across all banks which together dominate the retail market, averaged across the two models used, is a consequence of a fall in the general level of interest rates. There is, however, a significant unexplained portion of efficiency improvement, which may be due to either management effort to improve bank efficiency or technical progress.