Advanced Search
MyIDEAS: Login to save this article or follow this journal

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

Contents:

Author Info

  • Paradi, Joseph C.
  • Zhu, Haiyan
Registered author(s):

    Abstract

    The banking industry has been the object of DEA analyses by a significant number of researchers and probably is the most heavily studied of all business sectors. Various DEA models have been applied in performance assessing problems, and the banks' complex production processes have further motivated the extension and improvement of DEA techniques. This paper surveys 80 published DEA applications in 24 countries/areas that specifically focus on bank branches. Key issues related to the design of DEA models in these studies are discussed. Much advice is included on how to design future experiments and studies in this domain. A number of areas where further research could be fruitful are suggested.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/pii/S0305048312000254
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Omega.

    Volume (Year): 41 (2013)
    Issue (Month): 1 ()
    Pages: 61-79

    as in new window
    Handle: RePEc:eee:jomega:v:41:y:2013:i:1:p:61-79

    Contact details of provider:
    Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/375/description#description

    Order Information:
    Postal: http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
    Web: https://shop.elsevier.com/order?id=375&ref=375_01_ooc_1&version=01

    Related research

    Keywords: Data envelopment analysis; Banking; Performance; Efficiency; Benchmarking;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Sowlati, Taraneh & Paradi, Joseph C., 2004. "Establishing the "practical frontier" in data envelopment analysis," Omega, Elsevier, vol. 32(4), pages 261-272, August.
    2. Giokas, Dimitris I., 2008. "Assessing the efficiency in operations of a large Greek bank branch network adopting different economic behaviors," Economic Modelling, Elsevier, vol. 25(3), pages 559-574, May.
    3. Marcus Porembski & Kristina Breitenstein & Paul Alpar, 2005. "Visualizing Efficiency and Reference Relations in Data Envelopment Analysis with an Application to the Branches of a German Bank," Journal of Productivity Analysis, Springer, vol. 23(2), pages 203-221, 05.
    4. Boufounou, Paraskevi V., 1995. "Evaluating bank branch location and performance: A case study," European Journal of Operational Research, Elsevier, vol. 87(2), pages 389-402, December.
    5. Denise McEachern & Joseph Paradi, 2007. "Intra- and inter-country bank branch assessment using DEA," Journal of Productivity Analysis, Springer, vol. 27(2), pages 123-136, April.
    6. Giokas, DI, 1991. "Bank branch operating efficiency: A comparative application of DEA and the loglinear model," Omega, Elsevier, vol. 19(6), pages 549-557.
    7. Hartman, Thomas E. & Storbeck, James E. & Byrnes, Patricia, 2001. "Allocative efficiency in branch banking," European Journal of Operational Research, Elsevier, vol. 134(2), pages 232-242, October.
    8. Laurent Weill, 2004. "Measuring Cost Efficiency in European Banking: A Comparison of Frontier Techniques," Journal of Productivity Analysis, Springer, vol. 21(2), pages 133-152, March.
    9. Yang, J.B. & Wong, B.Y.H. & Xu, D.L. & Liu, X.B. & Steuer, R.E., 2010. "Integrated bank performance assessment and management planning using hybrid minimax reference point - DEA approach," European Journal of Operational Research, Elsevier, vol. 207(3), pages 1506-1518, December.
    10. Bauer, Paul W. & Berger, Allen N. & Ferrier, Gary D. & Humphrey, David B., 1998. "Consistency Conditions for Regulatory Analysis of Financial Institutions: A Comparison of Frontier Efficiency Methods," Journal of Economics and Business, Elsevier, vol. 50(2), pages 85-114, March.
    11. Canbas, Serpil & Cabuk, Altan & Kilic, Suleyman Bilgin, 2005. "Prediction of commercial bank failure via multivariate statistical analysis of financial structures: The Turkish case," European Journal of Operational Research, Elsevier, vol. 166(2), pages 528-546, October.
    12. Soteriou, Andreas C. & Zenios, Stavros A., 1999. "Using data envelopment analysis for costing bank products," European Journal of Operational Research, Elsevier, vol. 114(2), pages 234-248, April.
    13. Léopold Simar & Paul W. Wilson, 1998. "Sensitivity Analysis of Efficiency Scores: How to Bootstrap in Nonparametric Frontier Models," Management Science, INFORMS, vol. 44(1), pages 49-61, January.
    14. Berger, Allen N. & Humphrey, David B., 1997. "Efficiency of financial institutions: International survey and directions for future research," European Journal of Operational Research, Elsevier, vol. 98(2), pages 175-212, April.
    15. Fernandez-Castro, A & Smith, P, 1994. "Towards a general non-parametric model of corporate performance," Omega, Elsevier, vol. 22(3), pages 237-249, May.
    16. Athanasios G. Noulas & Niki Glaveli & Ioannis Kiriakopoulos, 2008. "Investigating cost efficiency in the branch network of a Greek bank: an empirical study," Managerial Finance, Emerald Group Publishing, vol. 34(3), pages 160-171.
    17. Drake, L & Howcroft, B, 1994. "Relative efficiency in the branch network of a UK bank: An empirical study," Omega, Elsevier, vol. 22(1), pages 83-90, January.
    18. Thanassoulis, E. & Boussofiane, A. & Dyson, R. G., 1996. "A comparison of data envelopment analysis and ratio analysis as tools for performance assessment," Omega, Elsevier, vol. 24(3), pages 229-244, June.
    19. Berger, Allen N. & DeYoung, Robert, 1997. "Problem loans and cost efficiency in commercial banks," Journal of Banking & Finance, Elsevier, vol. 21(6), pages 849-870, June.
    20. Dimitris I. Giokas, 2008. "Cost efficiency impact of bank branch characteristics and location: An illustrative application to Greek bank branches," Managerial Finance, Emerald Group Publishing, vol. 34(3), pages 172-185.
    21. Portela, Maria Conceicao A. Silva & Thanassoulis, Emmanuel, 2007. "Comparative efficiency analysis of Portuguese bank branches," European Journal of Operational Research, Elsevier, vol. 177(2), pages 1275-1288, March.
    22. Chrysovalantis Gaganis & Aggeliki Liadaki & Michael Doumpos & Constantin Zopounidis, 2009. "Estimating and analyzing the efficiency and productivity of bank branches: Evidence from Greece," Managerial Finance, Emerald Group Publishing, vol. 35(2), pages 202-218.
    23. Subhash C. Ray, 1991. "Resource-Use Efficiency in Public Schools: A Study of Connecticut Data," Management Science, INFORMS, vol. 37(12), pages 1620-1628, December.
    24. Smith, P, 1990. "Data envelopment analysis applied to financial statements," Omega, Elsevier, vol. 18(2), pages 131-138.
    25. Ferrier, Gary D. & Lovell, C. A. Knox, 1990. "Measuring cost efficiency in banking : Econometric and linear programming evidence," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 229-245.
    26. Banker, Rajiv D. & Cummins, J. David & Klumpes, Paul J.M., 2010. "Performance measurement in the financial services sector: Frontier efficiency methodologies and other innovative techniques," Journal of Banking & Finance, Elsevier, vol. 34(7), pages 1413-1416, July.
    27. Wade Cook & Moez Hababou & Hans Tuenter, 2000. "Multicomponent Efficiency Measurement and Shared Inputs in Data Envelopment Analysis: An Application to Sales and Service Performance in Bank Branches," Journal of Productivity Analysis, Springer, vol. 14(3), pages 209-224, November.
    28. Parkan, Celik & Wu, Ming-Lu, 1999. "Measurement of the performance of an investment bank using the operational competitiveness rating procedure," Omega, Elsevier, vol. 27(2), pages 201-217, April.
    29. Camanho, A.S. & Dyson, R.G., 2008. "A generalisation of the Farrell cost efficiency measure applicable to non-fully competitive settings," Omega, Elsevier, vol. 36(1), pages 147-162, February.
    30. Athanassopoulos, Antreas D, 1998. "Nonparametric Frontier Models for Assessing the Market and Cost Efficiency of Large-Scale Bank Branch Networks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(2), pages 172-92, May.
    31. Stanton, Kenneth R., 2002. "Trends in relationship lending and factors affecting relationship lending efficiency," Journal of Banking & Finance, Elsevier, vol. 26(1), pages 127-152, January.
    32. A. Camanho & R. Dyson, 2006. "Data envelopment analysis and Malmquist indices for measuring group performance," Journal of Productivity Analysis, Springer, vol. 26(1), pages 35-49, August.
    33. Silva Portela, Maria Conceicao A. & Thanassoulis, Emmanuel, 2005. "Profitability of a sample of Portuguese bank branches and its decomposition into technical and allocative components," European Journal of Operational Research, Elsevier, vol. 162(3), pages 850-866, May.
    34. Berger, Allen N. & Hancock, Diana & Humphrey, David B., 1993. "Bank efficiency derived from the profit function," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 317-347, April.
    35. Sherman, H. David & Rupert, Timothy J., 2006. "Do bank mergers have hidden or foregone value? Realized and unrealized operating synergies in one bank merger," European Journal of Operational Research, Elsevier, vol. 168(1), pages 253-268, January.
    36. Portela, Maria C.A.S. & Thanassoulis, Emmanuel, 2010. "Malmquist-type indices in the presence of negative data: An application to bank branches," Journal of Banking & Finance, Elsevier, vol. 34(7), pages 1472-1483, July.
    37. Camanho, A. S. & Dyson, R. G., 2005. "Cost efficiency measurement with price uncertainty: a DEA application to bank branch assessments," European Journal of Operational Research, Elsevier, vol. 161(2), pages 432-446, March.
    38. Fukuyama, Hirofumi & Weber, William L., 2010. "A slacks-based inefficiency measure for a two-stage system with bad outputs," Omega, Elsevier, vol. 38(5), pages 398-409, October.
    39. Resti, Andrea, 1997. "Evaluating the cost-efficiency of the Italian Banking System: What can be learned from the joint application of parametric and non-parametric techniques," Journal of Banking & Finance, Elsevier, vol. 21(2), pages 221-250, February.
    40. Mette Asmild & Fai Tam, 2007. "Estimating global frontier shifts and global Malmquist indices," Journal of Productivity Analysis, Springer, vol. 27(2), pages 137-148, April.
    41. Fethi, Meryem Duygun & Pasiouras, Fotios, 2010. "Assessing bank efficiency and performance with operational research and artificial intelligence techniques: A survey," European Journal of Operational Research, Elsevier, vol. 204(2), pages 189-198, July.
    42. Joseph Paradi & Sandra Vela & Haiyan Zhu, 2010. "Adjusting for cultural differences, a new DEA model applied to a merged bank," Journal of Productivity Analysis, Springer, vol. 33(2), pages 109-123, April.
    43. Parkan, Celik, 1987. "Measuring the efficiency of service operations: An application to bank branches," Engineering Costs and Production Economics, Elsevier, vol. 12(1-4), pages 237-242, July.
    44. Frei, Frances X. & Harker, Patrick T., 1999. "Measuring aggregate process performance using AHP," European Journal of Operational Research, Elsevier, vol. 116(2), pages 436-442, July.
    45. Cook, Wade D. & Hababou, Moez, 2001. "Sales performance measurement in bank branches," Omega, Elsevier, vol. 29(4), pages 299-307, August.
    46. Bala, Kamel & Cook, Wade D., 2003. "Performance measurement with classification information: an enhanced additive DEA model," Omega, Elsevier, vol. 31(6), pages 439-450, December.
    47. Paradi, Joseph C. & Rouatt, Stephen & Zhu, Haiyan, 2011. "Two-stage evaluation of bank branch efficiency using data envelopment analysis," Omega, Elsevier, vol. 39(1), pages 99-109, January.
    48. Schaffnit, Claire & Rosen, Dan & Paradi, Joseph C., 1997. "Best practice analysis of bank branches: An application of DEA in a large Canadian bank," European Journal of Operational Research, Elsevier, vol. 98(2), pages 269-289, April.
    49. Rolf F�re & Shawna Grosskopf, 2003. "Nonparametric Productivity Analysis with Undesirable Outputs: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 1070-1074.
    50. Dekker, David & Post, Thierry, 2001. "A quasi-concave DEA model with an application for bank branch performance evaluation," European Journal of Operational Research, Elsevier, vol. 132(2), pages 296-311, July.
    51. Jenkins, Larry & Anderson, Murray, 2003. "A multivariate statistical approach to reducing the number of variables in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 147(1), pages 51-61, May.
    52. Paradi, Joseph C. & Schaffnit, Claire, 2004. "Commercial branch performance evaluation and results communication in a Canadian bank--a DEA application," European Journal of Operational Research, Elsevier, vol. 156(3), pages 719-735, August.
    53. Cook, Wade D. & Seiford, Lawrence M. & Zhu, Joe, 2004. "Models for performance benchmarking: measuring the effect of e-business activities on banking performance," Omega, Elsevier, vol. 32(4), pages 313-322, August.
    54. Oral, Muhittin & Yolalan, Reha, 1990. "An empirical study on measuring operating efficiency and profitability of bank branches," European Journal of Operational Research, Elsevier, vol. 46(3), pages 282-294, June.
    55. Bauer, Paul W., 1990. "Recent developments in the econometric estimation of frontiers," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 39-56.
    56. Abhiman Das & Subhash C. Ray & Ashok Nag, 2005. "Labor-Use Efficiency in Indian Banking: A Branch Level Analysis," Working papers 2005-04, University of Connecticut, Department of Economics.
    57. Dennis Fixler & Kimberly Zieschang, 1999. "The productivity of the banking sector: integrating financial and production approaches to measuring financial service output," Canadian Journal of Economics, Canadian Economics Association, vol. 32(2), pages 547-569, April.
    58. Knox Lovell, C. A. & Pastor, Jesus T., 1997. "Target setting: An application to a bank branch network," European Journal of Operational Research, Elsevier, vol. 98(2), pages 290-299, April.
    59. Lawrence M. Seiford & Joe Zhu, 1999. "Profitability and Marketability of the Top 55 U.S. Commercial Banks," Management Science, INFORMS, vol. 45(9), pages 1270-1288, September.
    60. Rajiv D. Banker, 1993. "Maximum Likelihood, Consistency and Data Envelopment Analysis: A Statistical Foundation," Management Science, INFORMS, vol. 39(10), pages 1265-1273, October.
    61. Athanassopoulos, Antreas D., 1997. "Service quality and operating efficiency synergies for management control in the provision of financial services: Evidence from Greek bank branches," European Journal of Operational Research, Elsevier, vol. 98(2), pages 300-313, April.
    62. Nayantara D. Hensel, 2003. "Strategic Management of Cost Efficiencies in Networks: Cross-country Evidence on European Branch Banking," European Financial Management, European Financial Management Association, vol. 9(3), pages 333-360.
    63. Sherman, H. David & Gold, Franklin, 1985. "Bank branch operating efficiency : Evaluation with Data Envelopment Analysis," Journal of Banking & Finance, Elsevier, vol. 9(2), pages 297-315, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Wang, Ke & Huang, Wei & Wu, Jie & Liu, Ying-Nan, 2014. "Efficiency measures of the Chinese commercial banking system using an additive two-stage DEA," Omega, Elsevier, vol. 44(C), pages 5-20.
    2. Cook, Wade D. & Tone, Kaoru & Zhu, Joe, 2014. "Data envelopment analysis: Prior to choosing a model," Omega, Elsevier, vol. 44(C), pages 1-4.
    3. repec:cmj:journl:y:2013:i:27:popovicimc is not listed on IDEAS
    4. Kao, Chiang & Liu, Shiang-Tai, 2014. "Multi-period efficiency measurement in data envelopment analysis: The case of Taiwanese commercial banks," Omega, Elsevier, vol. 47(C), pages 90-98.
    5. Eskelinen, Juha & Kuosmanen, Timo, 2013. "Intertemporal efficiency analysis of sales teams of a bank: Stochastic semi-nonparametric approach," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5163-5175.
    6. Mihăiță-Cosmin M. Popovici, 2013. "Latest Challenges In Efficiency Convergence In Balkan And Baltic Countries," Network Intelligence Studies, Fundația Română pentru Inteligența Afacerii, Editorial Department, issue 2, pages 110-118, October.
    7. Mihăiță-Cosmin M. POPOVICI, 2013. "A Survey On Bank Efficiency Research With Data Envelopment Analysis And Stochastic Frontier Analysis," SEA - Practical Application of Science, Fundația Română pentru Inteligența Afacerii, Editorial Department, issue 1, pages 134-142, June.
    8. Eskelinen, Juha & Halme, Merja & Kallio, Markku, 2014. "Bank branch sales evaluation using extended value efficiency analysis," European Journal of Operational Research, Elsevier, vol. 232(3), pages 654-663.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:jomega:v:41:y:2013:i:1:p:61-79. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.