A survey on bank branch efficiency and performance research with data envelopment analysis

Paradi, Joseph C.; Zhu, Haiyan

doi:10.1016/j.omega.2011.08.010

Cited by 308 publications

(220 citation statements)

References 108 publications

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“…[BERG97] There exists a considerable number of papers on the use of DEA in the banking industry; however, the majority of these focus on banks at an institutional level. [PARA12] Institutional analysis has been most frequently used to assess the effects of ownership, bank type and regulatory and environmental changes, as well as bank performance and improvement, and international comparison. Whereas DEA branch analysis is applicable to a very broad range of business objectives, including the assessment of intermediation, cost, profitability, and resource allocation efficiencies and the identification of possible sources of inefficiency.…”

Section: Chapter 1: Introductionmentioning

confidence: 99%

Evaluation of bank branch growth potential using data envelopment analysis

LaPlante

Paradi

2015

Omega

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Banks occasionally employ frontier efficiency analyses to objectively identify best practices within their organizations. Amongst the frontier efficiency analyses identified in the literature, Data Envelopment Analysis (DEA) was found to be one of the leading approaches.DEA has been successfully applied in many bank branch performance evaluations using traditional intermediation, profitability and production approaches. However, there has been little focus on assessing the growth potential of individual branches.This research presents six models that examine four perspectives of branch growth. Each model was applied to the branch network of one of Canada's top five banks to gauge the growth potential of individual branches and to provide tailored improvement recommendations. Using various analysis methodologies, the results of each model were examined and their functionality assessed. Based on these findings, three models were deemed to produce significant results, while the remaining three failed to attain viable results.Multi-Stage Evaluation of Bank Branch Consolidation and Growth Potential Using DEA iii

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Section: Chapter 1: Introductionmentioning

confidence: 99%

Evaluation of bank branch growth potential using data envelopment analysis

LaPlante

Paradi

2015

Omega

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“…Since its introduction, DEA has been extensively employed in economic analysis to calculate measures of efficiencies in various situations and industries, such as transportation [29,31,32], government and public sector [33][34][35], public utilities [21,22,[36][37][38], healthcare [39][40][41], education [42,43], banking and finance [44,45], energy and environmental studies [46][47][48][49][50][51][52], manufacturing and information technology [53][54][55][56].…”

Section: Dea Methodsmentioning

confidence: 99%

Efficiency, Conflicting Goals and Trade-Offs: A Nonparametric Analysis of the Water and Wastewater Service Industry in Italy

Storto

2018

Sustainability

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This paper presents a benchmarking study of the water and wastewater industry in Italy. A three-stage modeling approach was implemented to measure the efficiency of 53 utility operators. This approach is based on the implementation of network and conventional data envelopment analysis (DEA) to model the production process of the water service utility operators. In comparison to the conventional black-box or one-stage production model generally adopted in previous studies, the proposed approach provides information relative to the different efficiency components of the stages and blocks of the water service production process and its overall efficiency. Further, by shifting the efficiency analysis to a two-dimensional performance space, i.e., resource and market-efficiency, it offers a more comprehensive view of the water service industry and allows accounting for different business goals at the same time and for an investigation of industry trade-offs. Results show that the operators' efficiencies in the Italian water service industry are generally variable and low. There are no water service utilities which are 100% efficient from the resource-efficiency perspective, and the maximum efficiency score is 0.545. Efficiency measurements suggest that there is a general orientation of the Italian water industry to not invest in upgrading and improving the infrastructure assets, and achieving an acceptable efficiency in the operations is critical to delivering water services to market in an efficient way. Only one utility operator is 100% efficient from the market-efficiency perspective. The low tariffs adopted by the water service operators do not allow the gaining of satisfactory service remuneration and the achievement of long-term business sustainability. The joint analysis of the resource and market efficiency scores indicates that there is a trade-off between the corresponding business goals.

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“…DEA has shown promising results in bank operational efficiency analysis ever since its introduction and researchers have produced a large and growing body of studies over the last 30 years (Emrouznejad, Parker, & Tavares, 2008;Paradi & Zhu, 2013). DEA determines a comparative ratio of the weighted sum of outputs to the weighted sum of inputs for each unit under evaluation.…”

Section: Non-parametric Methodsmentioning

confidence: 99%

“…(Paradi & Zhu, 2013). For all these aspects, the number of employees is generally considered to be an important input affecting the production efficiency of the branch; e.g., the production efficiency of the bank branch is analyzed by Paradi et al (Paradi, Rouatt, & Zhu, 2011), and the obtained efficiency score is considered to be an input in the second stage model to arrive at the overall operating efficiency of the branch.…”

Section: Evaluating Bank Branch Efficiency and Rational Inefficiencymentioning

confidence: 99%

Evaluating Canadian Bank Branch Operational Efficiency from Staff Allocation: A DEA Approach

Paradi¹,

Min²,

Yang

2014

MOS

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We examine the operational efficiency of one of the large Canadian banks' branches, which is primarily affected by its strategy of allocating staff and the service quality provided to customers. Two Data Envelopment Analysis (DEA) models are proposed in this research: (1) a staff allocation evaluation model pertinent to employee numbers and transaction volumes, and (2) a customer satisfaction benchmark model to check if the staff allocation scheme meets the expectations of the bank's management. Constant Returns to Scale (CRS) and Variable Returns to Scale (VRS) model results for different branch sizes and geographical regions are presented for analysis. The findings are compared to the bank's current models, validating the use of the proposed DEA models for evaluating operational efficiency from a staff allocation viewpoint in the banking industry. One of the interesting aspects of this work is that the requirement for best practice is not full efficiency but something less. The rationale is that if staff is pushed to the limit, they break and leave -the costs of training and integrating new staff is very high and service levels suffer.

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A survey on bank branch efficiency and performance research with data envelopment analysis

Cited by 308 publications

References 108 publications

Evaluation of bank branch growth potential using data envelopment analysis

Evaluation of bank branch growth potential using data envelopment analysis

Efficiency, Conflicting Goals and Trade-Offs: A Nonparametric Analysis of the Water and Wastewater Service Industry in Italy

Evaluating Canadian Bank Branch Operational Efficiency from Staff Allocation: A DEA Approach

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