Evaluating the financial performance of bank branches
AbstractIn this paper we evaluate the financial performance of virtually all of the branch offices of a large European savings bank for a recent six-month accounting period. We employ a complementary pair of nonparametric techniques to evaluate their financial performance, in terms of their ability to conserve on the expenses they incur in the process of building their customer bases and providing customer services valued by the bank. We find substantial variation in the ability of branch offices to perform this task, and substantial agreement on the identity of the branches at the bottom of the performance distribution. We then employ parametric techniques to determine that the list of indicators on which their financial performance is currently evaluated can be substantially reduced without statistically significant loss of information to bank management. Both findings suggest ways in which the bank can increase the profitability of its branch network.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number -2039.
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Note: In : Annals for Operations Research, 145, 321-337, 2006
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Other versions of this item:
- PASTOR, Jesus & LOVELL, Knox & TULKENS, Henry, 2003. "Evaluating the financial performance of bank branches," CORE Discussion Papers 2003094, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- PASTOR, Jesús T. & KNOX LOVELL, C.A. & TULKENS, Henry, . "Evaluating the financial performance of bank branches," CORE Discussion Papers RP -1961, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- D20 - Microeconomics - - Production and Organizations - - - General
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
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