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Bank efficiency in Bangladesh revisited: a slack-based network DEA approach

Author

Listed:
  • Md. Abul Kalam Azad
  • Peter Wanke
  • Mohammad Zahir Raihan
  • S.M. Rakibul Anwar
  • Riduanul Mustafa

Abstract

Purpose - Data envelopment analysis (DEA) calculates the efficiency of a business unit if all the inputs are creating outputs within a “black box.” Under traditional DEA, the detailed process of that business unit is ignored. However, a network DEA can explain the black box structure and provide efficiency results for sub-sections within any business process. This study aims to propose a network DEA model that explains a bank's total operation. Design/methodology/approach - Earlier studies have focused only on bank efficiency ignoring this breakdown. This study departs from them by using a slack-based two-stage network DEA under a novel banking business perspective. Findings - The results reveal that network DEA provides better benchmarking insights than the traditional DEA. As such, better benchmarking can guide both the banking industry managers and policy makers in Bangladesh. Originality/value - The major contribution of this study includes dividing a bank's total operation efficiency into two sub-operations: “core operations – collecting deposits and giving loans” and “additional operations – fees, commissions and other services.”

Suggested Citation

  • Md. Abul Kalam Azad & Peter Wanke & Mohammad Zahir Raihan & S.M. Rakibul Anwar & Riduanul Mustafa, 2020. "Bank efficiency in Bangladesh revisited: a slack-based network DEA approach," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 47(5), pages 1001-1014, April.
    • Handle: RePEc:eme:jespps:jes-01-2019-0029
    DOI: 10.1108/JES-01-2019-0029
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    Citations

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    Cited by:

    1. Francisco Gildemir Ferreira Silva, 2022. "Brazilian railways separability infrastructure/operations: investigation by production indicators," SN Business & Economics, Springer, vol. 2(7), pages 1-25, July.
    2. Riju Chaudhary & H. D. Arora, 2022. "Efficiency evaluation of public and nationalized Indian banks using data envelopment analysis," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 13(1), pages 469-478, February.
    3. M.V. Leonov, 2021. "Review of Modern Approaches for Assessing the Effectiveness of Banking," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 20(2), pages 294-326.
    4. Chang, Wentao & Yin, Shanminhui & Yu, Mingwen & Teymurova, Vusala & Balabeyova, Narmina, 2023. "Impact of innovation on Corporate Social Responsibility: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1185-1194.

    More about this item

    Keywords

    Network DEA; Data envelopment analysis; Efficiency; Bangladesh; G10; G21; L2;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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