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Performance Of Financial Holding Companies In Taiwan: An Application Of Network Data Envelopment Analysis

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  • Yueh-Chiang Lee
  • Yao-Hung Yang

Abstract

In this paper, we adopt the network data envelopment analysis model in lieu of the multi-stage data envelopment analysis model to evaluate the operational efficiency of financial holding companies and their subsidiaries; the advantage of the network data envelopment analysis model is that it fully captures the synergies of cross selling undertaken by subsidiaries. In this study, conducted in 2012, we find synergistic effects associated with the merger of four financial holding companies, Hua Nan, Cathay, Shin Kong and First, with operational efficiency significantly better than that of other financial holding companies. We also find that banking and securities companies of financial holding companies have superior operational efficiency to investment trust companies and insurance companies. This paper suggests that investment trust companies, insurance companies and securities companies within financial holding companies should decrease their use of relevant inputs to improve efficiency.

Suggested Citation

  • Yueh-Chiang Lee & Yao-Hung Yang, 2014. "Performance Of Financial Holding Companies In Taiwan: An Application Of Network Data Envelopment Analysis," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 8(3), pages 19-30.
    • Handle: RePEc:ibf:gjbres:v:8:y:2014:i:3:p:19-30
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    References listed on IDEAS

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    More about this item

    Keywords

    Network Data Envelopment Analysis; Operational Efficiency; Financial Holding Companies; Cross Selling; Synergy;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services

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