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Branch banking networks assessment using DEA:A benchmarking analysis

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Author Info
Aude Hubrecht-Deville () (Université de Bourgogne)
Abstract

This paper presents a benchmarking analysis of the branches and regional banks of a large French banking group. The analysis focuses on the operational performance. Starting from an “individual” diagnostic at the branch level, a “network” diagnostic is developed at the regional banks level. The variations of performance are discussed within each regional bank and from one regional bank to another by using a DEA (“Data Envelopment Analysis”) approach. This approach allows to develop a synthetic index called the technical inefficiency score. Results reveal that 30% of these branches are efficient. Special emphasis is placed on quantifying the productive gains at the regional banks level and on practicing intra- and inter regional banks benchmarking.

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File URL: http://www.u-bourgogne.fr/LEG/WP/1071103.pdf
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Publisher Info
Paper provided by Université de Bourgogne - Latec/Fargo (Research center in Finance,organizational ARchitecture and GOvernance) in its series Working Papers FARGO with number 1071103.

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Length: 15 pages
Date of creation: Nov 2007
Date of revision:
Handle: RePEc:dij:wpfarg:1071103

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Postal: Gérard Charreaux, Fargo-Latec, Université de Bourgogne 2 Bd Gabriel, BP 26611, 21066 Dijon Cedex, France

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Related research
Keywords: productivity; benchmarking; aggregate measure; branches; banking network.;

Find related papers by JEL classification:
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
M19 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Other

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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  1. 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. [Downloadable!] (restricted)
  2. Allen N. Berger & David B. Humphrey, 1997. "Efficiency of Financial Institutions: International Survey and Directions for Future Research," Center for Financial Institutions Working Papers 97-05, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
    Other versions:
  3. Berger, Allen N. & Leusner, John H. & Mingo, John J., 1997. "The efficiency of bank branches," Journal of Monetary Economics, Elsevier, vol. 40(1), pages 141-162, September. [Downloadable!] (restricted)
    Other versions:
  4. 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.
  5. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November. [Downloadable!] (restricted)
  6. 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. [Downloadable!] (restricted)
  7. Chambers, Robert G. & Chung, Yangho & Fare, Rolf, 1996. "Benefit and Distance Functions," Journal of Economic Theory, Elsevier, vol. 70(2), pages 407-419, August. [Downloadable!] (restricted)
  8. Walter Briec & Benoit Dervaux & Hervé Leleu, 2003. "Aggregation of Directional Distance Functions and Industrial Efficiency," Journal of Economics, Springer, vol. 79(3), pages 237-261, 07. [Downloadable!] (restricted)
  9. Michel Dietsch & Ana Lozano Vivas, . "How the Environment Determines the Efficiency of Banks: A Comparison between French and Spanish Banking Industry," Center for Financial Institutions Working Papers 97-29, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
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