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Benchmarks of the Efficiency of Bank Branches

Author

Listed:
  • Christiana V. Zenios

    (Treasury Department, Bank of Cyprus, PO Box 1472 Nicosia, Cyprus)

  • Stavros A. Zenios

    (Department of Public and Business Administration, University of Cyprus, PO Box 20537, CY 1678, Nicosia Cyprus)

  • Kostas Agathocleous

    (Organization and Methods Division, Bank of Cyprus)

  • Andreas C. Soteriou

    (Department of Public and Business Administration, University of Cyprus, PO Box 20537, CY 1678, Nicosia Cyprus)

Abstract

The Bank of Cyprus commissioned a study of the efficiency penalties paid by its branches operating in different environments. Bank staff and faculty members of the University of Cyprus jointly developed a data envelopment analysis (DEA) model that was used (1) to provide benchmarks on the relative efficiency of the bank's branches, (2) to provide guidelines for improvement to management, and (3) to isolate the effects of the environment on branch efficiency. The analysis showed that tourist branches were on average more efficient than urban branches during the peak tourist season. The DEA model was also used to benchmark seasonality effects. The analysis revealed branch resource underutilization, which depends on the season. The bank uses the DEA model developed to establish policy guidelines and to provide support for operational decisions toward performance improvement.

Suggested Citation

  • Christiana V. Zenios & Stavros A. Zenios & Kostas Agathocleous & Andreas C. Soteriou, 1999. "Benchmarks of the Efficiency of Bank Branches," Interfaces, INFORMS, vol. 29(3), pages 37-51, June.
    • Handle: RePEc:inm:orinte:v:29:y:1999:i:3:p:37-51
    DOI: 10.1287/inte.29.3.37
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    References listed on IDEAS

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    4. Martin R. Holmer & Stavros A. Zenios, 1995. "The Productivity of Financial Intermediation and the Technology of Financial Product Management," Operations Research, INFORMS, vol. 43(6), pages 970-982, December.
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    Citations

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    Cited by:

    1. Paradi, Joseph C. & Schaffnit, Claire, 2004. "Commercial branch performance evaluation and results communication in a Canadian bank--a DEA application," European Journal of Operational Research, Elsevier, vol. 156(3), pages 719-735, August.
    2. Andreas Soteriou & Stavros A. Zenios, 1999. "Operations, Quality, and Profitability in the Provision of Banking Services," Management Science, INFORMS, vol. 45(9), pages 1221-1238, September.
    3. Portela, Maria Conceicao A. Silva & Thanassoulis, Emmanuel, 2007. "Comparative efficiency analysis of Portuguese bank branches," European Journal of Operational Research, Elsevier, vol. 177(2), pages 1275-1288, March.
    4. Somesh K. Mathur, 2009. "Financial Analysis of the ICT Industry," Journal of Infrastructure Development, India Development Foundation, vol. 1(1), pages 17-43, June.
    5. Aggelopoulos, Eleftherios & Georgopoulos, Antonios, 2017. "Bank branch efficiency under environmental change: A bootstrap DEA on monthly profit and loss accounting statements of Greek retail branches," European Journal of Operational Research, Elsevier, vol. 261(3), pages 1170-1188.
    6. Jie Wu & Zhixiang Zhou, 2015. "A mixed-objective integer DEA model," Annals of Operations Research, Springer, vol. 228(1), pages 81-95, May.
    7. Cevdet Denizer & Mustafa Dinc & Murat Tarimcilar, 2007. "Financial liberalization and banking efficiency: evidence from Turkey," Journal of Productivity Analysis, Springer, vol. 27(3), pages 177-195, June.
    8. Joseph Paradi & Sandra Vela & Haiyan Zhu, 2010. "Adjusting for cultural differences, a new DEA model applied to a merged bank," Journal of Productivity Analysis, Springer, vol. 33(2), pages 109-123, April.
    9. Lutfi, & Suyatno,, 2019. "Determinants of Bank Efficiency: Evidence from Regional Development Banks," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 53(3), pages 59-74.
    10. Wagner A. Kamakura & Vikas Mittal & Fernando de Rosa & José Afonso Mazzon, 2002. "Assessing the Service-Profit Chain," Marketing Science, INFORMS, vol. 21(3), pages 294-317, February.
    11. Jinlong Lin & Xiaoxiao Chen & Guiquan Yan, 2023. "How Smart City Construction Affects Digital Inclusive Finance in China: From the Perspective of the Relationship between Government and Large Private Capital," Sustainability, MDPI, vol. 15(11), pages 1-17, June.
    12. E. Grigoroudis & E. Tsitsiridi & C. Zopounidis, 2013. "Linking customer satisfaction, employee appraisal, and business performance: an evaluation methodology in the banking sector," Annals of Operations Research, Springer, vol. 205(1), pages 5-27, May.
    13. Yi-cheng Liu & Yue-cune Chang, 2013. "The Regional Performances of Agricultural Bank of China Applying GEE Method Multiple Linear Regression," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 3(5), pages 1-3.
    14. Paradi, Joseph C. & Zhu, Haiyan, 2013. "A survey on bank branch efficiency and performance research with data envelopment analysis," Omega, Elsevier, vol. 41(1), pages 61-79.
    15. Iulia Cristina Iuga & Larisa-Loredana Dragolea, 2021. "Well-Being Impact on Banking Systems," JRFM, MDPI, vol. 14(3), pages 1-22, March.

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