Banks with the highest efficiency ratios are presumed to be the most efficient.

Question

Quizplus · Accepted Answer

The statement is false. Banks with the lowest efficiency ratios are actually considered the most efficient. Efficiency ratio is calculated by dividing a bank's non-interest expenses by its total revenue. Therefore, a lower efficiency ratio indicates that a bank is able to generate more revenue while keeping expenses low, which is a sign of higher efficiency.

Banks with the Highest Efficiency Ratios Are Presumed to Be