Development of energy benchmarking protocol for commercial banks, Lagos state, Nigeria

Abstract

Energy consumption is a central factor taken into consideration as far as management decisions are concerned in any firm and the same goes for the banking industry. More importantly is the extent to which firms consume energy efficiently. In the light of this, this study investigates the energy benchmarking of 50 commercial bank branches in Lagos. With the aid of questionnaires and by observation and consultation with the staff of the selected bank branches, data were collected on the energy use as well as several other variables that influence energy use intensity. An energy use intensity model was estimated using the fixed, random and pooled ordinary least square specifications and the predicted energy use intensity was constructed. Armed with the observed and predicted energy use intensities, an absolute benchmarking was conducted while a relative benchmarking was also conducted with the aid of the Data Envelopment Analysis (DEA) technique. The results of the regression analysis revealed a maximum of 60% of the branches of banks are energy efficient. However, the results of the DEA suggest that only a single branch of the 50 sampled branches was energy efficient while the other banks fell below the energy efficiency frontier with some banks performing relatively poorer than the others.