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Benchmarking thrift and mortgage finance companies

Author

Listed:
  • D.K. Malhotra
  • Raymond Poteau
  • Joseph J. Fritz

Abstract

This study uses data envelopment analysis (DEA) approach to benchmark the performance of 13 thrifts and mortgage finance companies against one another for the period 2008 to 2011. We cover the period of start of the economic crisis and the consequent passing of new law to regulate the financial services industry. We find that, at the height of the economic crisis in 2008, only five companies out of 13 thrifts and mortgage finance companies were efficient and in 2010, the number of efficient companies actually declined to four. In 2011, the number of efficient companies increased to eleven. We illustrate the use of data envelopment analysis (DEA), an operations research technique, to evaluate the relative financial strength of 13 thrift and mortgage firms by benchmarking them against their peers on the basis of four variables. DEA clearly brings out the firms that are operating more efficiently in comparison to other firms in the industry, and points out the areas in which poorly performing firms need to improve.

Suggested Citation

  • D.K. Malhotra & Raymond Poteau & Joseph J. Fritz, 2015. "Benchmarking thrift and mortgage finance companies," International Journal of Data Analysis Techniques and Strategies, Inderscience Enterprises Ltd, vol. 7(1), pages 21-39.
    • Handle: RePEc:ids:injdan:v:7:y:2015:i:1:p:21-39
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