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Sales performance measurement in bank branches

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  • Cook, Wade D.
  • Hababou, Moez

Abstract

Studies of bank branch performance have, to date, concentrated on obtaining a single perspective of efficiency. As the financial services industry has intensified, banks have increasingly engated in a proactive, differentiated and customer-based strategy in retail banking in which the sales component of the bank branch activity is emphasized. With the emerging sales culture within banks, as discussed earlier, there is a need to evaluate both sales and service performance. Cook et al. [12] have proposed a model to evaluate simultaneously the sales, service, and aggregate efficiencies of a bank branch. This model accounted for the fact that inputs, in particular resources, are often shared among these functions. In this paper, we extend the data envelopment analysis additive model using goal programming concepts. We thereby derive optimal efficiency scores while taking into account non-volume related activities, that is those involving resources that cannot be assigned to a specific input or output. Again, the proposed model derives an optimal split of the shared resources that maximizes the aggregate efficiency.

Suggested Citation

  • Cook, Wade D. & Hababou, Moez, 2001. "Sales performance measurement in bank branches," Omega, Elsevier, vol. 29(4), pages 299-307, August.
  • Handle: RePEc:eee:jomega:v:29:y:2001:i:4:p:299-307
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    References listed on IDEAS

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    1. 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.
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    5. Parkan, Celik, 1987. "Measuring the efficiency of service operations: An application to bank branches," Engineering Costs and Production Economics, Elsevier, vol. 12(1-4), pages 237-242, July.
    6. Thompson, Russell G. & Langemeier, Larry N. & Lee, Chih-Tah & Lee, Euntaik & Thrall, Robert M., 1990. "The role of multiplier bounds in efficiency analysis with application to Kansas farming," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 93-108.
    7. 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.
    8. Berger, Allen N. & Hunter, William C. & Timme, Stephen G., 1993. "The efficiency of financial institutions: A review and preview of research past, present and future," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 221-249, April.
    9. Fare, Rolf & Knox Lovell, C. A., 1978. "Measuring the technical efficiency of production," Journal of Economic Theory, Elsevier, vol. 19(1), pages 150-162, October.
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