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Evaluation of Individual and Aggregate Credit Institutions Management’s Performance

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  • Nicolae Dardac

    (Academy of Economic Studies, Bucharest)

  • Iustina Alina Boitan

    (Academy of Economic Studies, Bucharest)

Abstract

Data Envelopment Analysis method allows both the measurement of the relative efficiency of an homogenous group of credit institutions, and the identification of those banking activity’s components generating a state of inefficiency. The present study focuses on this last issue, by proposing an interpretation of inefficiency signals and by strengthening the major role played by the credit institution’s executive board in designing a viable, coherent business strategy and in defining its risk profile. DEA method places all the efficient credit institutions on the efficiency frontier, without allowing their differentiation. In order to exceed this limit, we have analysed and compared two ranking techniques. The results obtained suggest that the hierarchy generated by the two techniques hasn’t changed significantly for almost 60% of our sample of credit institutions.

Suggested Citation

  • Nicolae Dardac & Iustina Alina Boitan, 2008. "Evaluation of Individual and Aggregate Credit Institutions Management’s Performance," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 5(5(522)), pages 61-70, May.
    • Handle: RePEc:agr:journl:v:5(522):y:2008:i:5(522):p:61-70
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    Cited by:

    1. Andries, Alin Marius & Cocris, Vasile, 2010. "A Comparative Analysis of the Efficiency of Romanian Banks," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 54-75, December.
    2. Suela Kristo, 2013. "Efficiency of the Albanian banking system: Traditional approach and Stochastic Frontier Analysis," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 6(3), pages 61-78, December.

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