Using Network DEA to Explore the Effect of Mobile Payment on Taiwanese Bank Efficiency

Abstract

In order to explore the potential influence of new mobile payment services on the Ephesus model developed by Kao and Hwang (2008), we investigated the relative performance of 19 Taiwanese banks from 2018 to 2021. The network efficiency was divided into two parts: management efficiency and profitability efficiency. Only one bank achieved total efficiency from 2019 to 2021. The stage efficiencies showed increments during the first three years (2018–2020), but they declined in 2021. Most banks had low efficiency in the management stage and high efficiency in the profitability stage, suggesting that there are weaknesses in the management of physical resources but high awareness that mobile payment services can be exploited to achieve high profitability. Our results prove that mobile payment is a potential and profitable new service that Taiwanese banks should take advantage of. Comparing the results between the CCR model and the NDEA model, we observed that the NDEA model has more explanatory power, as it provides insight into the internal structure of the working process of Taiwanese banks.

A New Resource Allocation Multiple Criteria Decision-Making Method in a Two-Stage Inverse Data Envelopment Analysis Framework for the Sustainable Development of Chinese Commercial Banks

“…Unlike traditional inverse DEA models, the new two-stage anti DEA model differs in that it adds the third and fourth constraints of model (10). According to model (7), the decrement of b kj is also the increment of b kd ; the third constraint is thus used to ensure that the decrement of undesirable outputs is not less than ∆b * kd .…”

“…Proof. Because ∆x * id and ∆z * f d are the optimal solution of model (10) According to Theorem 1, the optimal efficiency θ * d of DMU d obtained by model ( 13) is equal to the optimal efficiency θ * d of DMU d , and the new method is thus effective.…”

“…Omrani et al (2023) proposed a mixed-integer network DEA with shared inputs and undesirable outputs for evaluating the efficiency of internet banking [9]. Tong et al (2023) used network DEA to evaluate the relative performance of 19 Taiwanese banks from 2018 to 2021 [10]. Xie et al (2022) constructed a network DEA model with a multi-period leader-follower model for evaluating the efficiency of 16 representative Chinese commercial banks from 2009 to 2018 [11].…”

Mobile payment-banking efficiency nexus—A concise review of the evolution and empirical exploration of the Taiwan banking industry

“…Secondly, from an empirical perspective, our study utilizes datasets that directly capture mobile payment activities within Taiwanese banks, which are officially provided by the Taiwan Financial Supervisory Commission. Different from Tong et al (2023), we incorporate the demand deposit variable as a crucial resource for mobile payment activities. Our model enables the efficiency decomposition capability for the network operation and elucidates the role/impact of mobile payment on the operational process in banking industry.…”

“…These variables, viewed from a production-oriented perspective, signify investments in payment channels rather than the intrinsic efficiency of cashless payment operations. In a complementary vein, Tong et al (2023) employed variables that offer a more precise reflection of mobile payment activities, namely the number of mobile payment users and electronic financial transaction volume. This study adopts the intermediation approach, where variables related to mobile payments and deposits are harnessed to generate traditional bank outputs, encompassing lending, investment, and non-interest income.…”